How does a limited partnership differ from a general partnership in terms of liability?

A limited partnership is characterized by having at least one general partner who holds unlimited liability and one or more limited partners whose liability is restricted to the amount of their investment in the partnership. This structure allows the limited partners to contribute capital without assuming the personal risk for the partnership's debts beyond their initial investment.

In contrast, in a general partnership, all partners share equal liability for the partnership's debts, meaning that each partner is personally liable for the full extent of the partnership’s obligations. This can put all partners' personal assets at risk, unlike in a limited partnership where the limited partners are financially protected beyond their investment amount.

Thus, the distinction in liability—where some partners have restricted liability while others do not—underpins the unique nature of limited partnerships, making the answer correct.