A limited partner becomes liable as a general partner if they participate in what?

A limited partner becomes liable as a general partner when they participate in the control of the business. This principle is rooted in the distinctions between limited partners and general partners in a limited partnership. Limited partners are typically passive investors whose liability is limited to their investment in the partnership, while general partners manage the business and assume full personal liability for the partnership's obligations.

When a limited partner engages in control activities—such as making day-to-day managerial decisions, binding the partnership with contracts, or otherwise exercising authority over operations—they risk losing their limited liability protection. This participation could blur the lines between their role and that of a general partner, which is why control is the critical factor.

In contrast, activities related to financial decision-making or management of contracts may not necessarily equate to control of the business. A limited partner might have insight into financial aspects or review contracts without taking on a controlling role, and such involvement alone does not alter their liability status. Hence, the correct focus on control clarifies the legal boundaries governing limited partnerships.