KINDS OF PARTNERS
There are different kinds of partners classified on the basis
of managerial interests, profit sharing, behaviour and and status.
They are as follows.
1. Active Partner
A partner who takes active part in the management of the
partnership firm is known as active or working or managing or
general partner. His liability is unlimited.
2. Sleeping Partner or Dormant Partner
The partners who merely contribute capital and do not take
active interest in the conduct of the business of the firm are called
sleeping or dormant or financing partners.
3. Nominal or Ostensible Partner
He is a partner who neither contributes capital nor takes
any part in the management of the firm. He lends his name to be
used as partner in the business to increase the reputation of the
firm. They are not eligible for a share in the profit. They are also
liable to the creditors for the debts of the firm.
4. Partners in Profit Only
A person who shares the profit of a firm but does not share
the loss, is called “partner in profit only”. Usually he has no voice in
the management of the firm. But his liability to third parties is
unlimited .
5. Partner by Estoppel
A person may not be really a partner in the business. But by
his behaviour he makes outsiders believe that he is a partner in the
business. Then, he is liable to such outsiders who advance money
to the firm or enter into a contract under such false belief. Such a
person is known as “partner by estoppel”. He cannot later on deny
that he is not a partner.
6. Partner by Holding out
When a person who is not really a partner in a business, is
described as a partner to others, then he must at once deny it when he
comes to know about it. If he keeps quiet, then he is liable to other
persons who do business with that partnership believing that he is also a
partner. Such a person is called partner by holding out.
7. Sub-Partner
When a person makes an arrangement with a partner to share
his profit, he is known as a sub-partner. Such a sub-partner has no
rights against the firm, as he is not liable for the debts of the firm.
8. Minor as a Partner
A minor is a person who has not completed 18 years of age,
where a guardian is appointed by a court, his age of majority extends
to 21 years. Legally, a minor cannot become a partner because he
is incapable of entering into a contract. He may, however, be
admitted to the benefits of partnership with the consent of all partners.
There are different kinds of partners classified on the basis
of managerial interests, profit sharing, behaviour and and status.
They are as follows.
1. Active Partner
A partner who takes active part in the management of the
partnership firm is known as active or working or managing or
general partner. His liability is unlimited.
2. Sleeping Partner or Dormant Partner
The partners who merely contribute capital and do not take
active interest in the conduct of the business of the firm are called
sleeping or dormant or financing partners.
3. Nominal or Ostensible Partner
He is a partner who neither contributes capital nor takes
any part in the management of the firm. He lends his name to be
used as partner in the business to increase the reputation of the
firm. They are not eligible for a share in the profit. They are also
liable to the creditors for the debts of the firm.
4. Partners in Profit Only
A person who shares the profit of a firm but does not share
the loss, is called “partner in profit only”. Usually he has no voice in
the management of the firm. But his liability to third parties is
unlimited .
5. Partner by Estoppel
A person may not be really a partner in the business. But by
his behaviour he makes outsiders believe that he is a partner in the
business. Then, he is liable to such outsiders who advance money
to the firm or enter into a contract under such false belief. Such a
person is known as “partner by estoppel”. He cannot later on deny
that he is not a partner.
6. Partner by Holding out
When a person who is not really a partner in a business, is
described as a partner to others, then he must at once deny it when he
comes to know about it. If he keeps quiet, then he is liable to other
persons who do business with that partnership believing that he is also a
partner. Such a person is called partner by holding out.
7. Sub-Partner
When a person makes an arrangement with a partner to share
his profit, he is known as a sub-partner. Such a sub-partner has no
rights against the firm, as he is not liable for the debts of the firm.
8. Minor as a Partner
A minor is a person who has not completed 18 years of age,
where a guardian is appointed by a court, his age of majority extends
to 21 years. Legally, a minor cannot become a partner because he
is incapable of entering into a contract. He may, however, be
admitted to the benefits of partnership with the consent of all partners.
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