Kinds Of Partners In Business
“A business may have different kinds of partners depending on their input and role in business. ”
A business may have different kinds of partners depending on their input and role in business. An active partner is one who takes active part in day-to-day activities of the business. He may act in different capacities such as manager, organizer, advisor and controller of all affairs of the firm. He may also be called a working partner.On the other hand a sleeping partner or dormant partner is one who contributes capital, shares profits and contributes to the loses of the business but does not take part in the working of the concern.
A person may have money to invest but he may not be able to devote time for the business. Sleeping partner is liable for all the liabilities of the business like other partners but he is not known to the public as a partner. So, he may also called as a Secret Partner.
A nominal partner is one who lends his name to the firm. He does not contribute any capital nor does he share the profits of the business. The third parties know him as a partner.
On the strength of his name, the business may get more credit in the market and may promote its sales. A nominal partner is liable to those third parties who give credit to the firm on the assumption of that person being a partner in the firm.
A person may become a partner for sharing the profits only. He contributes capital and is also liable to third parties like other partners. He is not allowed to take part in the management of the business. Such partners are associated for their money and goodwill.
When a person is not a partner, either by words or in writing or by his acts, he is called a partner by estoppels or by holding out. A partner by estoppels or by holding out shall be liable to outsiders who deal with the firm on the presumption of that person being a partner in the business even though he is not a partner and does not contribute anything to the business.
There are secret partners too. The position of a secret partner lies between active and sleeping partners. His membership of the firm is kept secret from outsiders. The liability that is entrusted upon him is limitless and he stands responsible for any kind of loss to the business.
Author - DeeKay
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