Describe various-types of partners.
The
different kinds of Partners that are found in Partnership Firms are as follows!
1. Active or managing partner:
A person who takes active interest in the
conduct and management of the business of the firm is known as active or
managing partner.
He carries on business on behalf of the other partners.
If he wants to retire, he has to give a public notice of his retirement;
otherwise he will continue to be liable for the acts of the firm.
2. Sleeping or dormant
partner:
A sleeping partner is a partner who ‘sleeps’,
that is, he does not take active part in the management of the business. Such a
partner only contributes to the share capital of the firm, is bound by the
activities of other partners, and shares the profits and losses of the
business. A sleeping partner, unlike an active partner, is not required to give
a public notice of his retirement. As such, he will not be liable to third
parties for the acts done after his retirement.
3. Nominal or ostensible
partner:
A nominal partner is one who does not have any
real interest in the business but lends his name to the firm, without any
capital contributions, and doesn’t share the profits of the business. He also
does not usually have a voice in the management of the business of the firm,
but he is liable to outsiders as an actual partner.
4. Partner
by estoppel or holding out:
If a person, by his words or conduct, holds
out to another that he is a partner, he will be stopped from denying that he is
not a partner. The person who thus becomes liable to third parties to pay the
debts of the firm is known as a holding out partner.
There are two essential conditions for the
principle of holding out : (a) the person to be held out must have made the
representation, by words written or spoken or by conduct, that he was a partner
; and (6) the other party must prove that he had knowledge of the
representation and acted on it, for instance, gave the credit.
5. Partner in profits
only:
When a partner agrees with the others that he would
only share the profits of the firm and would not be liable for its losses, he
is in own as partner in profits only.
6. Minor as a partner:
A partnership is created by an agreement. And
if a partner is incapable of entering into a contract, he cannot become a
partner. Thus, at the time of creation of a firm a minor (i.e., a person who
has not attained the age of 18 years) cannot be one of the parties to the
contract. But under section 30 of the Indian Partnership Act, 1932, a minor
‘can be admitted to the benefits of partnership’, with the consent of all
partners. A minor partner is entitled to his share of profits and to have
access to the accounts of the firm for purposes of inspection and copy.
He, however, cannot file a suit against the
partners of the firm for his share of profit and property as long as he remains
with the firm. His liability in the firm will be limited to the extent of his
share in the firm, and his private property cannot be attached by creditors.
On his attaining majority, he has to decide
within six months whether he will become regular partner of withdraw from
partnership. The choice in either case is to be intimated through a public
notice, failing which he will be treated to have decided to continue as
partner, and he becomes personally liable like other partners for all the debts
and obligations of the firm from the date of his admission to its benefits (and
not from the date of his attaining the age of majority). He also becomes
entitled to file a suit against other partners for his share of profit and
property.
7. Other partners:
In partnership firms, several other types of
partners are also found, namely, secret partner who does not want to disclose
his relationship with the firm to the general public. Outgoing partner, who
retires voluntarily without causing dissolution of the firm, limited partner
who is liable only up to the value of his capital contributions in the firm,
and the like.
The different kinds of Partners that are found in Partnership Firms are as follows!
1. Active or managing partner:
A person who takes active interest in the conduct and management of the business of the firm is known as active or managing partner.
He carries on business on behalf of the other partners. If he wants to retire, he has to give a public notice of his retirement; otherwise he will continue to be liable for the acts of the firm.
2. Sleeping or dormant partner:
A sleeping partner is a partner who ‘sleeps’, that is, he does not take active part in the management of the business. Such a partner only contributes to the share capital of the firm, is bound by the activities of other partners, and shares the profits and losses of the business. A sleeping partner, unlike an active partner, is not required to give a public notice of his retirement. As such, he will not be liable to third parties for the acts done after his retirement.
3. Nominal or ostensible partner:
A nominal partner is one who does not have any real interest in the business but lends his name to the firm, without any capital contributions, and doesn’t share the profits of the business. He also does not usually have a voice in the management of the business of the firm, but he is liable to outsiders as an actual partner.
4. Partner by estoppel or holding out:
If a person, by his words or conduct, holds out to another that he is a partner, he will be stopped from denying that he is not a partner. The person who thus becomes liable to third parties to pay the debts of the firm is known as a holding out partner.
There are two essential conditions for the principle of holding out : (a) the person to be held out must have made the representation, by words written or spoken or by conduct, that he was a partner ; and (6) the other party must prove that he had knowledge of the representation and acted on it, for instance, gave the credit.
5. Partner in profits only:
When a partner agrees with the others that he would only share the profits of the firm and would not be liable for its losses, he is in own as partner in profits only.
6. Minor as a partner:
A partnership is created by an agreement. And if a partner is incapable of entering into a contract, he cannot become a partner. Thus, at the time of creation of a firm a minor (i.e., a person who has not attained the age of 18 years) cannot be one of the parties to the contract. But under section 30 of the Indian Partnership Act, 1932, a minor ‘can be admitted to the benefits of partnership’, with the consent of all partners. A minor partner is entitled to his share of profits and to have access to the accounts of the firm for purposes of inspection and copy.
He, however, cannot file a suit against the partners of the firm for his share of profit and property as long as he remains with the firm. His liability in the firm will be limited to the extent of his share in the firm, and his private property cannot be attached by creditors.
On his attaining majority, he has to decide within six months whether he will become regular partner of withdraw from partnership. The choice in either case is to be intimated through a public notice, failing which he will be treated to have decided to continue as partner, and he becomes personally liable like other partners for all the debts and obligations of the firm from the date of his admission to its benefits (and not from the date of his attaining the age of majority). He also becomes entitled to file a suit against other partners for his share of profit and property.
7. Other partners:
In partnership firms, several other types of partners are also found, namely, secret partner who does not want to disclose his relationship with the firm to the general public. Outgoing partner, who retires voluntarily without causing dissolution of the firm, limited partner who is liable only up to the value of his capital contributions in the firm, and the like.
