unlimited liability


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Related to unlimited liability: Sole trader

Unlimited liability

Full liability for the debt and other obligations of a legal entity. The general partners of a partnership have unlimited liability.

Unlimited Liability

The responsibility of one or more owners of a business for the total amount of debt and other liabilities that the business accrues, regardless of how much the owner(s) have personally invested. That is, suppose two persons form a general partnership and each invests $10,000. If the business later accrues $100,000 in liabilities, both partners are equally responsible for the $80,000 over and above what they have invested. If the business defaults, the personal assets of the partners may be seized to repay debts. Unlimited liability contrasts with limited liability, which limits the amount one can lose on an investment to the total amount invested. Unlimited liability is most common in general partnerships, sole proprietorships, and for general partners in limited partnerships.

unlimited liability

The liability of the owner of a business for all the obligations of the business. An owner's personal assets can be seized if the business's assets are insufficient to satisfy claims against it. The placement of personal assets at risk is a great disadvantage of proprietorships and general partnerships. The ability to limit the amount of liability to which an owner is subject is a major reason for the formation of corporations and limited partnerships. Compare limited liability.

unlimited liability

see LIMITED LIABILITY.

unlimited liability

see LIMITED LIABILITY.
References in periodicals archive ?
Regression 2 (Test on Unlimited Liability Firms) 1 2 Pooled Unlimited Outside Wealth (DIV) 0.
However, over the subsequent half-century, a significant number of unlimited liability joint stock banks emerged.
The interests of private partners as committed, long-term owners and managers with unlimited liability are much less likely to diverge substantially from the interests of bondholders, no matter what bonuses and pay packages the partners are receiving.
Capital Sources: Individual members with both limited and unlimited liability contributed 15% of Lloyd's capital in 2008.
First, as a mere extension of the owner, the entrepreneur retains personal liability for the debts incurred in furtherance of the business, exposing the entrepreneur to unlimited liability for the businesses debts.
These are Unlimited Liability Corporations (ULC) that are established either under the laws of Alberta or Nova Scotia.
While these entities receive favorable taxation, they are generally subjected to unlimited liability to satisfy the businesses debt and legal obligations.
And as the low deductibles and unlimited liability in the Medicare program show, the health insurance created by political commissions subject to special pleading seldom looks like the health insurance that real people want to buy.
It ruled that the Director could be exposed to unlimited liability because he had no way of knowing how many persons were affected by the pine shake problem.
There are a number of advantages in setting up as a limited company - incorporation - including ring fencing business risk by ensuring the directors are not exposed to unlimited liability to the creditors as well as providing a flexible vehicle for wealth extraction, e.
The Fifth Circuit also determined there was at least one major, independent business reason to form TE to develop and sell land--to insulate ME and its partners from unlimited liability from a multitude of sources.