Q.Discuss different types of partners.

Partners are classified on the basis of their participation in capital, management and sharing of profits/losses. The common types are active, sleeping, nominal, partner by estoppel (holding out), partner in profits only, secret partner and a minor admitted to the benefits of the firm.

Different Types of Partners

• Active (Working) Partner: Contributes capital and takes an active part in the day-to-day management of the firm. He shares profits and losses and has unlimited liability.
• Sleeping (Dormant) Partner: Contributes capital and shares profits and losses but does not take part in the management. His liability is also unlimited, though he remains unknown to outsiders.
• Nominal Partner: Only lends his name and reputation to the firm. He neither contributes capital nor shares profits, but is liable to third parties as a partner.
• Partner by Estoppel (Holding Out): A person who, by his words or conduct, represents himself (or allows himself to be represented) as a partner, is liable to those who give credit to the firm on that belief, even though he is not a real partner.
• Partner in Profits only: Shares only the profits of the firm and not the losses; usually admitted for his money or goodwill. His liability to third parties is still unlimited.
• Secret Partner: Participates in capital, management and profits like an ordinary partner, but his membership is kept secret from the outside world; his liability is unlimited. …