Question

'A', 'B', 'C', 'D' and 'V are partners in partnership firm. The firm has different types of partners. Mr. A has contributed capital and participates in the management of firm. He shares profits and losses and is liable to an unlimited extent to the creditors of the firm.
Mr. B has contributed capital and shares its profits and losses. He also has unlimited liability but he does not take part in day to day activities of business. Association of Mr. C is not known to the general public but in all other respects he is like an active partner. Mr. D has allowed the firm to use his name as he enjoys good reputation among clients but he does not either contribute capital or take part in the management.
Master 'E', 15 years of age is entitled to the benefits of partnership with mutual consent of all their members. He is not eligible to take part in management of firm and shares only profits and not losses of the firm.
(i) How many partners do the firm has?
(ii) Who is the active partner and what is the nature of his liability in the firm?
(iii) Who is the sleeping partner in the firm and what is the nature of his liability?
(iv) What kind of partner is Mr.0 and what kind of liability does he have in the firm?
(v) How does the partnership relationship of Mr. C differs from Mr. D ? How do they differ in their liability?
(vi) Is Mast. E a legal partner? Can be held liable for the liability of the firm?

Answer 1

(i)- Five partners- A, B, C, D, V

Note-

A person who is minor cannot enter into a valid contract. However, he can become a partner with the consent of all other partners. A minor can share profits of a business but not the losses.

(ii)- Mr. A, is an active partner because-

he takes active part in the affairs of business and its management is called active partner. He contributes his share in the capital and is liable to pay the obligations of the firm.

(iii)- A sleeping partner is one who only contributes is the capital but does not take part in the management of the business is known as a sleeping partner. He is liable to pay the obligations of the firm.

Hence, Mr B is a sleeping partner.

(v)- It differs on the basis of liability, Mr C will face unlimited liablity whereas Me D will have liablity upto certain extent say the fund raised by the company by using his name.It is the point where relationship of Mr C differs from Mr. D.