Question

Which is the incorrect type of partner?




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Answer 1

We are asked which type of partner is the incorrect type of partner. The answer will be the nominal partner.

• A partnership is a business in which people come together to run a business.
• The people who come together are called partners and they jointly share the profit and loss of the business.
• A nominal partner is a person who lends his name to the partnership concern but is not actually considered a partner of the firm.
• He just lends his name so that the business can enjoy higher profits by people assuming that he is an actual partner.
• They will only be liable to the third party if they face a loss thinking that the person is an actual partner of the firm.
• Other than the above, the nominal partner neither shares the profit nor loss of the firm.
• Therefore the incorrect type of partner will be the nominal partner.

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