Login

What is the difference between 'Limited Liability' and 'Unlimited Liability' ? Give example..

Dear Student,

In case of limited liability,the assets of the person( partner in case of partnership firm) cannot be used to settle the liabilities (or we say debts) of the firm whereas in case of unlimited liability, personal assets of the partner or owner can be used to pay off the debts or liabilities if assets of the firm are not enough to settle the dues.


For ex :
            If Partnership  Firm XYZ (having unlimited liability) has a liability  of 10,00,000. 
           and at the time of winding up of the firm the assets of the firms fetches Rs 7,00,000
           Then the partners of the Firm( X ,Y and Z) will be liable to Settle the dues by selling there personal assets 
   
Regards

  • 0
View Full Answer
Limited liability :- the condition by which shareholders are legally responsible for the debts of a company only to the extent of the nominal value of their shares. Unlimited liability:- Unlimited liability refers to the full legal responsibility that business owners and partners assume for all business debts. This liability is not capped, and obligations can be paid through the seizure and sale of owners' personal assets, which is different than the popular limited liability business structure.
  • -1
What are you looking for?