Asked by Christian Broussard on May 01, 2024
Verified
Discuss the following characteristics of partnerships:
a) Limited life
b) Mutual agency
c) Unlimited liability
Unlimited Liability
A legal structure in business where the owners are personally responsible for all the debts and liabilities of the business.
Mutual Agency
A principle in partnerships where each partner has the authority to bind the partnership to contracts within the scope of the business's operations.
Limited Life
A term that refers to the finite existence of a business entity or an asset's useful life.
- Understand the principle of shared responsibility in collaborations.
- Recognize and describe the intent and crucial aspects of the articles of partnership.
Verified Answer
RH
Ramla HassanMay 07, 2024
Final Answer :
a) A partnership has a limited life. Whenever there is a change in the membership of a partnership, the partnership is dissolved. If a partnership is dissolved, a new partnership can be formed, and the business can continue to operate without any interruptions.
b) Mutual agency means that the actions of one partner are binding on all other partners. This is true as long as the action is within the scope of the business. All the partners are agents of the business.
c) Unlimited liability means that if a partnership is unable to pay its obligations, each general partner is individually liable to cover, with his or her personal assets, the obligations the partnership cannot meet. New partners are generally not liable for pre-existing debts. Some states provide for limiting certain partners' liability to the amount of their investment. These people are called limited partners.
b) Mutual agency means that the actions of one partner are binding on all other partners. This is true as long as the action is within the scope of the business. All the partners are agents of the business.
c) Unlimited liability means that if a partnership is unable to pay its obligations, each general partner is individually liable to cover, with his or her personal assets, the obligations the partnership cannot meet. New partners are generally not liable for pre-existing debts. Some states provide for limiting certain partners' liability to the amount of their investment. These people are called limited partners.
Learning Objectives
- Understand the principle of shared responsibility in collaborations.
- Recognize and describe the intent and crucial aspects of the articles of partnership.