Question

Liability of partners in respect of the firm’s debt is ______.

Options

• Limited upto the amount of their capital in the business

• Unlimited

• Limited upto the amount of guarantee given by the Partner

• None of these

Answer 1

Liability of partners in respect of the firm’s debt is unlimited.

Explanation:

According to the Indian Partnership Act, 1932 the liability of partners in a general partnership is:

• Unlimited – meaning partners are personally liable for the debts of the firm.
• If business assets are insufficient to cover debts, partners may have to pay from their personal property.