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8 Kinds of Business Partners In Business Management
There are different kinds of partners and they may be classified as under:
1. Active Partner. An active partner is one who takes active part in the day-to-day working of the business. He may act in different capacities such as manager, organizer, adviser and controller of all the affairs of the firm. He may also be called a working partner.
2. Sleeping or Dormant Partner. A sleeping partner is one who contributes capital, shares profits and contributes to the losses of the business but does not part in the working of the concern. A person may have money to invest but he may not be able to devote time for the business : such a person may become sleeping partner.
Sleeping partner is liable for the liabilities of the business like other partners. He cannot bind the business, i.e., to third parties, by his acts. He is not known to the public as a partner, so be may be called as a ‘secret partner.’
3. Nominal Partner. A nominal partner is one who lends his mane to the fem. He does not contribute any capital nor does he shares profits of the business. He is known as partner to the third parties. On the strength of his name, the business may get more credits in the market or may promote its sales. A nominal partner is liable to those third parties who give credit to the fires the assumption of that person being a partner in the firm.
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4. Partner in Profits. A person may become a peter for the goes only. He contributes capital and is also liable to third parties like other partners. He is not allowed to take part is die management of the business. Such partners are associated for their money and goodwill.
5. Partner by Estoppel or Holding Out. When a person is not a partner but poses himself as a partner, either by words or in writing or by his acts, he is called a partner by estoppel or by holding out. A partner by estoppel or by holding out shall be liable to outsiders who deal with the form on the presumption of that person being a partner in the business even though he is not a partner and does not contribute anything to the business.
6. Secret Partner. The position of a secret partner lies between active and sleeping per His membership of the firm is kept secret from outsiders. His liability is unlimited and he is liable for the losses of the business. He can take part in the working of the business.
7. Sub-Partner. A partner may associate anybody else in his share in the firm. He gives a part of his share to the stranger. The relationship is not between the sub-partner and the firm but between him and the partner. The sub-partner is a non-entity for the partnership. He is not liable for the debts of the firm.
8. Minor as a Partner. A minor is a person who has not yet attained the age of majority. A minor cannot enter into a contract according to the Indian Contract Act because a contract by a minor is void ab initio.
8 Kinds of Business Partners In Business Management
However, a minor may be admitted to the benefits of an existing partnership with the consent of all partners. The minor is not personally liable for liabilities of the firms, but his share in the partnership property and profits of the firm will be liable for debts of the firm. A minor has the following rights and liabilities under the Partnership Act:
1. A minor has a right to such share of property and of profits of the firm as may be agreed upon by all the partners.
2. A minor may inspect the accounts of the firm or take note of the accounts.
3. The personal property of the minor is not liable for the debts of the firm. But his share in property of the firm and profits is liable for the debts and obligations of the firm.
4. So long as a minor remains a partner he cannot file a suit against other partners for accounts or for the payment of his share in the property or profits of the firm. He can do this only when he wants to swear his relations with the partnership firm.
5. At any time within 6 months of his attaining majority (i.e. completing 18 years of age) the minor may give public notice of the fact that he has decided to become or not to become a partner in the firm. In case he does not give any such notice within six months, it shall be presumed that he has opted to become a partner.
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6. In case minor decides to become a partner, he will be personally liable to third parties for all acts of firm, since he was admitted to the benefits of the firm.
7. If a minor decides not to become a partner, his rights and liabilities continue to be those of a minor up to the date on which he gives public notice. His share will not be liable for any acts of the firm done after the date of the notice.