General partnership liability describes the legal responsibility of partners in a general partnership for the debts and obligations of the business. In this structure, each partner is personally liable for all partnership liabilities, including those incurred by other partners. This liability is typically unlimited, extending to personal assets.
Context
General partnership liability presents a substantial risk for participants in certain decentralized autonomous organizations (DAOs) or other informal crypto ventures. Without a recognized legal entity structure, members might unintentionally incur unlimited personal responsibility for the organization’s actions or debts. This legal exposure highlights the urgent need for clearer regulatory guidance on the legal classification of decentralized groups.
The judicial classification of a DAO as a general partnership fundamentally re-architects DeFi legal risk, imposing joint and several liability on participants.
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