Types of partners

Introduction of partnership
Meaning and definition
Types of partners
Active / Managing partner
Sleeping partner
Nominal partner
Partner by estoppel
Partner in profits only
Minor partner
Secret partner
Outgoing partner
Sub partner
Limited partner

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3. TYPES OF PARTNERS Presented by Geethanjali S Under the guidance of Sundar B.N Asst. Prof. and co-ordinator of M com

4. INDEX Introduction Meaning and Definition Types of partners

5. Introduction Partnership is a form of business organization wherein two or more persons join together in order to carry out business. A partnership can be considered as an improvement of “ sole proprietorship ” wherein a single person carries out his business with his individual resources, skills and efforts. 

6. Meaning and Definition According to  Section 4  of the  Indian Partnership Act, 1932 , a partnership is defined as a relationship between two persons who mutually agreed to share the profits and losses in the business. Therefore, persons who have entered into an agreement with one another are individually known as “partners”.

7. Types of Partner Active/Managing Partner Sleeping Partner Nominal Partner Partner by Estoppel Partner in Profits only Minor Partner Secret Partner Outgoing partner Limited partner Sub-Partner

8. Active/Managing Partner An active partner mainly takes part in the day-to-day running of the business and also takes active participation in the conduct and management of the business firm. He carries the daily business activities on behalf of other partners.

9. Sleeping Partner A sleeping partner is also known as a “ dormant partner ”. This partner does not participate in the day-to-day functioning activities of the partnership firm. A person who has sufficient money or interest in the firm, but cannot devote his time to the business , can act as a sleeping partner in the firm. However, he is bound by all the acts of the other partners.

10. Nominal Partner A nominal partner does not have any real or significant interest in the partnership firm. In simple words, he is only lending his name to the firm and does not have a voice in the management of the firm.

11. Partner by Estoppel A partner by estoppel is a partner who displays by his words, actions or conduct that he is the partner of the firm. In simple words, even though he is not the partner in the firm but he has represented himself in such a manner which depicts that he has become a partner by estoppel or partner by holding out .

12. Partners in profits only This partner of a firm will only share the profits of the firm and won’t be liable for any losses of the firm. Moreover, if a partner who is in “partner in profits only” deals with any of the third parties or outsiders then he will be liable for the acts of profit only and not any of the liability.

13. Minor Partner A minor is a person who is yet to attain the age of majority in the law of the land. According to  Section 3  of the  Indian Majority Act, 1875  a person is deemed to have attained the age of majority when he attains 18 years of age. However, a minor can also be appointed to claim the benefits of the Partnership.   

14. Secret Partner In a partnership, the position of secret partner lies between the active and sleeping partner . The membership of the firm of a secret partner is kept secret from the outsiders and third parties . His liability is unlimited since he holds a share in profit and shares liabilities for losses in the business. He can even take part in working for the business. 

15. Outgoing Partner An outgoing partner is a partner who voluntarily retires without dissolving the firm. He leaves the existing firm, therefore he is called as an outgoing or retiring partner.

16. Limited Partner A limited partner is a partner whose liability is only upto the extent of his contributions for the capital of the partnership firm.

17. Sub Partner A sub-partner is a partner who associates someone else in his share of the firm. He gives a part of his share to the person . It is pertinent to note that, the relationship is not between the sub-partner and the partnership firm but is between him and the partner.

18. Reference Retrieved from….. https//blog.ipleders.in/types-partnership-act/ This article is written by   Sparsh Agarwal