The correct answer to the question is:
Unlimited liability
Explanation:
1. Unlimited liability in a partnership means that each partner is personally responsible for the debts and obligations of the partnership.
2. This implies that if the partnership assets are not enough to cover the debts, creditors can go after the personal assets of the individual partners to settle the debts.
3. Limited life refers to the characteristic that a partnership does not have a perpetual existence and can be dissolved due to various reasons such as the withdrawal or death of a partner.
4. Mutual agency indicates that each partner can act on behalf of the partnership and bind the partnership to agreements and contracts.
Therefore, in the context of the question, the characteristic of partners being legally required to pay partnership debts even out of personal assets is known as unlimited liability.
