Ravi, Prakash and Sunny are partners in a partnership firm. Ravi and Sunny take active part in the operation of business whereas Prakash has contributed capital but do not participate in day to day activities of the business. They admitted Dinesh as a nominal partner. They mutually decided to form partnership for a specified time period. They also made a written agreement to govern the partnership but did not get the firm registered
In the context of above case:-
a. What is meant by nominal partner?
b. What type of partner Prakash is? Comment on the liability of such type of partner.
C. Which type of partnership is highlighted in above case?
d. What is the written agreement between the partners called? List any four contents of such written
agreement.
Answers
Answer:
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Answer:
Explanation:
a) A nominal partner is one who allows the use of his/her name by a firm, but does not contribute to its capital.He/she does not take active part in managing the firm, does not share its profit or losses but is liable, like other partners, to the third parties, for the repayments of the firm’s debts.
b) Prakash is a sleeping or dormant partner. such type of partner has unlimited liability.
c) The partnership highlighted in the above case is PARTICULAR PARTNERSHIP.
d) The written agreement which specifies the terms and conditions that govern the partnership is called the partnership deed. The partnership deed generally includes the following aspects:
• Name of firm
• Nature of business and location of business
• Duration of business
• Investment made by each partner