When can a limited partner be personally liable beyond their contribution?

A limited partner in a limited partnership generally enjoys protection from personal liability beyond their contribution, but this protection can be compromised if they engage in certain activities. When a limited partner takes part in controlling the business, they may lose their limited liability status and become personally liable for the debts and obligations of the partnership beyond their initial investment.

This is because limited partners are meant to be passive investors, making contributions but not taking part in management. If they step into a controlling role, they may be deemed to be acting similarly to a general partner, thereby exposing themselves to the liabilities that the general partners face.

Other scenarios, such as making additional cash contributions or managing day-to-day operations, also relate to the responsibilities of partners but are not the defining factors for the personal liability of limited partners. Simply contributing more cash does not change the liability status unless it is accompanied by actions that constitute control over the partnership. Therefore, the crucial point here is that the assumption of control is what triggers the possibility of personal liability for a limited partner.