What is the nature of a general partnership?

In a general partnership, the nature of the relationship between the partners is defined by the principle of unlimited liability. This means that all partners in the partnership share full responsibility for the debts and obligations of the business. Each partner’s personal assets can be at risk if the partnership incurs debts or legal judgments, and creditors can pursue any partner for the full amount owed.

This characteristic is fundamental to understanding how partnerships operate, especially in terms of risk and responsibility. Unlike limited partnerships where some partners enjoy limited liability, a general partnership exposes each partner to the potential financial consequences of the business's operations. Therefore, option C accurately reflects that all partners are fully liable for the partnership's debts, aligning with the legal structure and expectations for such business entities. The other options do not correctly represent the liability dynamics within a general partnership.