What type of liability is a characteristic of a partnership?

A partnership is characterized by unlimited liability, which means that each partner is personally responsible for the debts and obligations of the business. If the partnership incurs debts or faces legal action, creditors can pursue the personal assets of any partner to recover what is owed. This creates a significant financial risk for partners, as their personal assets, such as homes or savings, may be at stake.

Limited liability, found in structures like corporations or limited liability companies (LLCs), protects personal assets from business liabilities, but this does not apply to traditional partnerships. No liability is not applicable since partners do assume some level of responsibility for the business's financial obligations. Vicarious liability refers to the legal responsibility one party has for the actions of another, typically seen in employer-employee relationships, rather than direct liability characteristics of a partnership.

Therefore, unlimited liability accurately describes the financial risk inherent in partnerships and is a key characteristic that potential partners must understand when entering into such an arrangement.