Question

Explain different types of partner

Answer 1

1. Active or managing partner:

A person who takes active interest in the conduct and management of the business of the firm is known as active or managing partner.

2. Sleeping or dormant partner:

A sleeping partner is a partner who ‘sleeps’, that is, he does not take active part in the management of the business. Such a partner only contributes to the share capital of the firm, is bound by the activities of other partners, and shares the profits and losses of the business. A sleeping partner, unlike an active partner, is not required to give a public notice of his retirement. As such, he will not be liable to third parties for the acts done after his retirement.

3. Nominal or ostensible partner:

A nominal partner is one who does not have any real interest in the business but lends his name to the firm, without any capital contributions, and doesn’t share the profits of the business. He also does not usually have a voice in the management of the business of the firm, but he is liable to outsiders as an actual partner.

4. Partner by estoppel or holding out:

If a person, by his words or conduct, holds out to another that he is a partner, he will be stopped from denying that he is not a partner. The person who thus becomes liable to third parties to pay the debts of the firm is known as a holding out partner.

5. Partner in profits only:

When a partner agrees with the others that he would only share the profits of the firm and would not be liable for its losses, he is in own as partner in profits only.

6. Minor as a partner:

A partnership is created by an agreement. And if a partner is incapable of entering into a contract, he cannot become a partner. Thus, at the time of creation of a firm a minor (i.e., a person who has not attained the age of 18 years) cannot be one of the parties to the contract. But under section 30 of the Indian Partnership Act, 1932, a minor ‘can be admitted to the benefits of partnership’, with the consent of all partners. A minor partner is entitled to his share of profits and to have access to the accounts of the firm for purposes of inspection and copy.

7. Other partners:

In partnership firms, several other types of partners are also found, namely, secret partner who does not want to disclose his relationship with the firm to the general public. Outgoing partner, who retires voluntarily without causing dissolution of the firm, limited partner who is liable only up to the value of his capital contributions in the firm, and the like.

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Answer 2

Answer: There are different types of partners:

1. . Active or managing partner
2. Sleeping or dormant partner
3. Nominal or ostensible partner
4. Partner by estoppel or holding out
5. Partner in profits only
6. Minor as a partner
7. Other partners

Explanation:

1. Active or managing partner-A person who takes actively takes part or interest in the conduct and management of the business/firm is known as active or managing partner.
2. Sleeping or dormant partner- He / She is not actively involved in business And takes part only in share capital , shares the profits and losses of the firm.
3. Nominal or ostensible partner- A partner whose name is used in the business but he does not share any capital or profits and losses of business. He does not have voice in the business but is liable to outsiders as partner.
4. Partner by estoppel or holding out-If a person, by his words or conduct, holds out to anyone else that he is a partner. The person who becomes liable to third parties to pay the debts of the firm is known as a holding out partner or partner by estoppel.
5. Partner in profits only-When a partner agrees that he would only share the profits of the firm and would not be liable for the losses of the business. He is partner in profits only.
6. Minor as a partner-If a partner is incapable of entering into a contract, he cannot become a partner. Thus, at the time of formation of a firm/business a minor that is a person who has not attained the age of 18 years cannot be one of the parties to the contract. But under section 30 of the Indian Partnership Act, 1932, a minor ‘can be given  the benefits of partnership’, with the consent of all the partners. A minor partner is given his share of profits and also allowed to have access to the accounts of the firm for purposes of inspection and copy.
7. Other partners: Like,  secret partner who does not want to disclose his relationship with the firm to the public. Outgoing partner, who retires by his own will without causing dissolution of the firm, limited partner who is liable only up to the value of his capital contributions in the firm/business.