Types of Partners:
There are 8 types of Partners:
1. Active Partners:
A partner who is actively engaged in the conduct of a business is known as an active partner. He may be called a working partner.
He takes an active part in the management of the business. His liabilities are unlimited. He is the First types of partners.
2. Sleeping or Dormant Partner:
A sleeping or Dormant partner is one who contributes capital, shares profit and losses of the firm but does not participate in the working of the business. He is bound by the activities of other partners.
3. Nominal Partner:
A Nominal Partner is one who neither invests capital nor does he share the profits and losses of the firm.
He merely lends his name to the firm to be used as a partner. But he is equally liable to the third parties for the activities of the firm.
4. Partner in Profits Only:
He is a partner who shares the profit of the firm but is not liable for losses. He contributes capital and is also liable to the third parties like other partners.
5. Minor Partner:
A minor partner cannot become a partner in a partnership firm because according to the Indian Contract Act, a minor cannot either into a contract.
However, a minor may be admitted to the benefits of the partnership with the consent of all the partners. The liability of a minor partner is limited and he cannot take part in the management of the business.
6. Incoming Partner:
A partner who is admitted as a partner in an existing partnership is called an incoming partner. A new person can be taken with the consent of all the partners.
7. Outgoing Partner:
A partner leaving the existing firm is known as an outgoing or retiring partner. A new person can be taken as a partner with the consent of all the partners.
8. Partner by Estoppel or Holding out:
When a person is not a partner, but he poses himself as a partner by words spoken or written or by his conduct is called a partner by Estoppel.
Like s nominal partner he also has no right as a partner. He shall be liable to the third parties who deal with the firm on the supposition that he is a partner.
Minor As a Partner:
A Minor cannot become a partner in the partnership because according to the Indian Contract Act, a Minor is incapable of entering into a contract of partnership.
However, a minor may be admitted to the benefits of the partnership with the consent of all the partners.
Position of a Minor Partner:
The Position of minor partner may be studied under the following two heads:
1. Position before attaining Majority.
2. Position on Attaining majority.
1. Position before attaining Majority :
I) Every minor partner has a right to such of the property and of profits of the firm as may have been agreed upon.
II) Every minor partner has a right to inspect and copy any of the accounts.
The liability of the minor partner is confined only to the extent of his share in the profits and property of the partnership firm.
Over and above this a minor partner is neither personally liable not his private property can be attracted.
2. Position on Attaining majority:
On attaining majority, the minor has to declare within 6 months whether he shall continue in the firm or leave it.
If he fails to declare, he is deemed to have become a partner in the firm on expiry of the said 6 months.
A) Where he selects to become a partnership:
I) He becomes personally liable to third parties for all acts of the firm done since he was admitted to the benefits of the partnership.
II) His share in the profits and property of the firm is the share to which he was entitled as a minor partner.
B) Where he selects not to become a partner:
I) His rights and liabilities continue to be those of a minor up to the date of the notice.
II) He is not liable for any act of the firm done after the date of the public notice.
III) He is entitled to sue the partners for his shares of the property and profits in the firm.