In private companies and partnerships, active owners can usually know more about daily affairs and borrowing, so the source argues their liability should not automatically be limited.
A sleeping partner who does not manage may have limited liability by agreement. Juristically, this can mean he did not authorize active partners to incur debt beyond business assets; excess debt can then fall on those who exceeded authority.
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Limited Liability: Inheritance Under Debt, Historical Analogy and Practical Limits
In private companies and partnerships, active owners can usually know more about daily affairs and borrowing, so the source argues their liability should not automatically be limited.
A sleeping partner who does not manage may have limited liability by agreement. Juristically, this can mean he did not authorize active partners to incur debt beyond business assets; excess debt can then fall on those who exceeded authority.