What is the primary legal characteristic of a partnership?

The primary legal characteristic of a partnership is that owners are responsible for all debts of the business. In a partnership, all partners have joint and several liabilities, which means that each partner can be held responsible for the total amount of any business debts. This characteristic underlines the nature of partnerships where contributions, responsibilities, and liabilities are typically shared among the partners. If the partnership cannot meet its obligations, creditors can pursue any partner for full payment, making it crucial for partners to trust one another and work closely together in managing the business.

The concept of shared liability is fundamental in partnerships, highlighting the importance of mutual agreement and trust among partners. This legal structure is different from a corporation, where shareholders have limited liability, protecting their personal assets from business debts. Understanding this characteristic is essential for anyone considering forming or joining a partnership, as it impacts personal financial risk and decision-making within the business.