Question

explain the concept of limited liability and how, in practice, some creditors(such as suppliers or lenders) may seek to overcome limited liability

Answer 1

The concept of limited liability states that person's financial liability will be limited to a fixed sum; and thus in a partnership or limited liability company it provides a protection for shareholders as there liability would not exceed the amount invested in a partnership or limited liability company and they can be only held liable for their investment value in the company's share capital.

Although the limited partners can only lose to their investment in business as they do not manage the business, but the creditors (such as suppliers or lenders) may sue them for the repayment for partnership’s debt and held them personally liable for the partnership's debt and creditor's claims if proved that a limited partner perform the acts as was a general partner