What type of partner limits themselves from liability for a financial loss?

A limited partner is a type of partner in a business who contributes capital to the partnership but is not involved in its day-to-day management and operations. This arrangement allows them to limit their financial liability to the amount of their investment in the business. In the event of financial losses or debts incurred by the partnership, a limited partner's personal assets are protected; they cannot lose more than what they have invested.

This structure encourages individuals to invest in partnerships without exposing themselves to unlimited financial risk, differentiating them from general partners who assume full liability for the debts and obligations of the business. Silent partners, while they may also not be involved in management, do not specifically limit their financial liability in the same way as limited partners. Active partners, similarly, participate in the management of the business and carry the same liability as general partners. Thus, the status of limited partner clearly spells out the advantage of financial protection in a partnership structure.