Alabama Real Estate Practice Exam

What is a joint venture characterized by?

1. Single manager

2. Equal liability among parties

3. Owning shares in a corporation

4. Limited liability

The correct answer is: Equal liability among parties

A joint venture is a partnership between two or more parties where the parties have equal liability. This means that all parties involved are responsible for any debts, losses, or legal actions that may arise from the venture. This differs from a single manager, where one person has ultimate control and liability for the venture. Owning shares in a corporation also does not necessarily guarantee equal liability among parties, as shareholder liability is usually limited to the amount contributed for their shares. Limited liability means that the liability of each party is limited to their investment in the venture, making it an incorrect characterization of a joint venture.