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 ?
suggests that proportionate unlimited liability for torts--that is,
(9) In our main analysis, we excluded firms with unlimited liability because there is no clear distinction between entrepreneurs' firm wealth and out-of-firm wealth without the protection of limited liability.
In Table 4, column 1 presents the estimation result of regression 2 that includes both limited and unlimited liability firms.
A bank with unlimited liability, like those in California and Scotland, could not pass along any of the losses to depositors.
With passage of the 1999 Montreal Convention, aviation now has unlimited liability. (125) The 1999 Montreal Convention unified and replaced various systems of liability for air carriers provided in the 1929 Warsaw Convention and related agreements.
The Antideficiency Act violation was caused by a contract containing a hold-harmless clause which subjected the Commission to potentially unlimited liability. The violation was resolved by termination of the contract in fiscal year 2009 and the Commission's reporting of the violation in fiscal year 2010.
- Owners jointly assume personal and unlimited liability.
The unit will be managed by Evrard Bordier, who joined the bank as a partner with unlimited liability on 1 January.
The private partnership form of organization naturally reduces risk-taking incentives due to the fact that partners face unlimited liability. In addition, the private partnership, due to its limited access to financial markets, curtails firms' ability to grow to sizes that make them "too big to fail."
Use of uncovered calls is a fundamental mistake (an uncovered call obligates the seller to sell stock not owned at a set price, in essence creating unlimited liability).
He focuses on the negative incentive effects of unlimited liability: creditors will be induced to take excessive risk, leading to overprovision of capital to risky businesses.
They have argued that limited liability should be countenanced because an alternative scheme of unlimited liability would impose greater costs on economic production, including an increase in agency and capital costs.

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