Why might a general partner face unlimited personal liability?

A general partner faces unlimited personal liability primarily due to the nature of partnership agreements, which typically involve joint and several liabilities. In a general partnership, all partners are jointly responsible for the debts and obligations of the business. This means that if the business cannot meet its obligations, creditors can pursue personal assets of the general partners to satisfy business debts. Unlike limited partners, who have their liability capped at their investment in the partnership, general partners are fully liable for the actions and decisions made within the scope of the partnership. This inherent characteristic of partnership structures is critical for anyone entering into such agreements to understand, as it significantly impacts personal financial risk and legal standing.