Types of Trees

Q. 11. What are the different types of partners?

Ans: A partner is a person who contributes capital, manages business, shares the profit, bears the loss and whose liability is unlimited.

Follow/mg are the different types of partners:

1) Active partner: Active partner is that partner who contributes capital and skill and takes active interest in day to day business of the firm. He is also called as ’working partner’ or ‘managing partner’. For extra interest he may get extra salary or commission. Active partner shares the profit bears the loss and his liability is Unlimited He is the real partner oi partnership firm.

2) Sleeping partner: Sleeping partner is that partner who contributes capital but does not take active interest in day to day business at the first. He voluntarily surrenders his right at management to other partners. He is also called as ‘dormant partner’ or 'financing partner’. Like active partner, he shares the profit bears the losses and his liability is unlimited.

3) Nominal partner: Nominal partner is that partner who lends his name. tame and reputation to partnership firm. He does not contribute any capital or takes active it interests in clay to day business of the firm? He is admitted into partnership to get more 3 business He may or may not share the profits of partnership. It depends upon agreement. However, his liability is unlimited Generally reputed and famous person is admitted as nominal partner.

4) Minor partner: Minor is one whose age is below '18 years. As per Indian Contract Act 1872 a minor cannot be admitted into partnership because he is not capable 0i entering into connect. However, as per Section 30 of Indian Partnership Act, 1932 a minor can be admitted partnership for the benefit of the firm with the permission of all partners ‘The agreement is signed by the guardian of minor. There must be at least two major partners before admitting minor partner.A minor is not allowed to take part in the management of firm. Hence his liability is limited.

5) Partner in profit only: Partner in profit only is that partner who wants to share only profits of the firm and not the losses of the firm A special agreement will be made between partner in profit only and other partners. Partner' in profit only is not allowed to take part in the management of firm However, his liability to unlimited.

6) Secret partner: Secret partner is that partner who wants his name to be kept secret. He contributes capital, shares the profit, bears the loss and his liability is unlimited. He does not take part in management of the firm. He is unknown as partner to general public.

7} Quasi partner: Quasi partner is that partner who has retired from the partnership firm but has kept his capital in the firm. He does not take part in the management of the firm. He may get interest on his capital. However, his liability is unlimited.

8) Sub-partner: Sub-partner is the partner of a partner. He is not the partner or partnership firm. He gets share in the profit earned by other partner. He does not contribute capital nor shares the profit and loss of the firm. He is not liable for the debts of the firm.

9} Partner by holding out: A person who is not a partner in the firm but he represents himself as a partner by words spoken or written or by his behavior is called a partner by holding out.

10} Partner by estoppel: The partner by estoppel does not contribute capital in the firm not participate in the management of the firm. He is not a partner in the firm at all. However, he behaves in such a way as if he is a partner of the firm. He creates the impression in the minds of others that he is one of the partners of the firm.