In what situation might a partnership face personal liability?

A partnership can face personal liability in situations where a partner commits fraud while acting on behalf of the partnership because the law holds all partners liable for the wrongful acts of their partners committed within the scope of the partnership's business. This principle is rooted in the nature of partnerships as a collective enterprise where each partner acts both as an agent for the partnership and for the other partners. When a partner engages in fraud, which typically involves deceitful practices intended to secure an unfair or unlawful gain, the other partners can also be held responsible for that fraudulent act. This liability reflects the idea that partners have a duty to act in the best interests of the partnership and that their actions can directly impact the partnership's reputation and financial well-being.

The other scenarios do not inherently create personal liability for the partners. Non-compliance with tax exemption status is a concern for the partnership itself rather than the individuals personally, and while a partner’s withdrawal may affect the partnership’s structure, it does not create liability for prior actions taken before withdrawal. Additionally, the absence of a written agreement does not automatically subject partners to personal liability; partnerships can exist and function without written documentation, although such a setup can lead to complications in terms of rights and obligations.