Top: Business: By Type: Unlimited Liability

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Definition

If businesses with unlimited liability go bankrupt, they must pay all their debts to the people they owe money to. With unlimited liability, the owners of the business must give up personal items and money to fully pay off the debts if the business is not worth more than the debts.


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Getting Unlimited Liability

Banks normally give sole traders and partnerships unlimited liability. This is because banks see smaller businesses as risky to them in terms of finances. Businesses aim to receive limited liability. 



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