Question

Any partner who invests in the business but does not take active part in the business is ___________.

• A. secret partner
• B. sleeping partner
• C. active partner
• D. nominal partner

Answer 1

The correct option is B sleeping partner

A sleeping or dormant partner is one who is reality a partner but whose name does not appear in any way as a partner and who is not known to the outside world as a partner. He is liable to third parties if he is subsequently discovered by them.

He has no duties to perform but has the right of access to the books of accounts which he can examine and copy.

As a dormant partner he has no duty to perform,a firm is not dissolved on his insanity or permanent incapacity. He contributes capital and shares profits or losses in agreed ratio.