Types of partners

types of partners

1. Types of Partners & Partnership By Dr. Sridevi Krishna Asst Professor VVLC

2. Active/ Managing Partner Also known as the ‘ostensible partner’. -Takes an active part in the firm and the running of the business. He carries on the daily business on behalf of all the partners. Acts as an agent of all the other partners on a day to day basis and with regards to all ordinary business of the firm. Hence it is imperative that an Active partner issues a public notice when he desires to retire from the firm. This will absolve him of the liability for acts done by other partners after his retirement

3. Sleeping/Dormant Partner He does not participate in the conduct of the business but he is bound by the conduct of all the partners. - Continues to share the profits and losses of the firm and even brings in his share of capital like any other partner.

4. Nominal Partner In perspective, such partner only lends his name to the partnership. -Does not make any capital contributions to the firm, and thus, he is not entitled to a share in the profits either. -Will be liable to outsiders and third parties for acts done by any other partners

5. Partner in profit only Only shares the profits of the firm, and is not liable for any liabilities. -Even when dealing with third parties he will be liable for all acts of profit only, having no share of the liabilities.

6. Minor partner A minor cannot be a partner to a partnership as such a contract is void under provisions of Indian Contract Act, 1872. However, he can be admitted to the benefits of partnership provided all partners consent for the same. -A minor partner, on attaining majority (becoming 18 years of age) has six months to decide if he wishes to become a partner of the firm. -Whether he continues as a partner or decides to retire, in both cases he will have to issue a public notice.

7. Partner by estoppel If a person holds out to another that he is a partner of the firm, either by his words, actions or conduct then such a partner cannot deny that he is not a partner. -This basically means that even though such a person is not a partner he has represented himself as such, and so he becomes partner by estoppel or partner by holding out.

8. Types of Partnership Duration Partnership at will - Section 07 of the Indian Partnership Act explains partnership-at-will. - When no provision is made for the duration or determination of partnership in the contract between the partners, it is partnership-at-will. b. Partnership for fixed duration - During the formation of a partnership, if the partners determine and agree upon a particular duration for the partnership, beyond completion of which, the partnership would expire, such a partnership is referred as ‘Partnership for fixed duration’

9. With regards to ‘extent of business carried by partnership’ a. General Partnership - When a partnership is formed such that the scope of business is not well defined, it is termed as ‘General Partnership’ b. Particular Partnership - Section 08 of Indian Partnership Act explains Particular Partnership. - A partnership maybe formed to carry out a continuous business or in particular for a certain venture, post completion of which, the partnership would dissolve. Such a partnership is said to be ‘Particular Partnership’.