What is the partnership? Explain in detail the types of partners and the rights and duties of partners in a partnership firm and company.
Answers
Partnership is a type of business organisation in which 2 or more individuals come together and jointly agree to pursue a business by contributing capital and sharing profits.
There are 6 types of partners -
a) Active partner : This partner contributes to capital, takes a share of the
profits, manages the business activities and has
unlimited liability.
b) Dormant/Sleeping : This partner contributes to capital, takes a share
of the profits, but does not take part in the
management of the business activities and has
unlimited liability.
c) Nominal - i) By holding out : This partner does not contribute capital,
does not take a share of the profits, does
not takes part in management , and is liable
to pay for any losses that the firm incurs by
using his name.
ii) By estoppel : This partner does not contribute capital,
does not take a share of the profits, does
not takes part in management , and is liable
to pay for any losses that the firm incurs by
using his name.
d) Minor Partner : This partner does not contributes capital, does not
participate in managing the business, faces no liability,
but gets a share in the profits. He/She becomes an
active partner when they reach the age of majority.