Kinds of Partners:
The partners of the firm can be classified into the following three types:
- General Partners
- Special Partners
- Other Partners.
1. General Partners
They are the partners whose liability is unlimited in the firm. Nearly all the partners of a firm are general partners. They are of two types:
a. Active Partner:
A partner who takes active part in the management of the business is called Active Partner. He is also known as working or managing partner.
b. Dormant or Sleeping Partner:
He is the one who contributes capital, shares profits , and losses of the firm and is bound by the activities of other partners. But he takes no part in the day-to-day management of the affairs of the firm.
2. Special Partners:
They are found in limited partnership. Their liability is limited to the extent of their capital contribution.
3. Other Partners:
Other types of partners are the followings:
a. Nominal Partners:
They are the ones who neither invest capital nor does he share the profits and losses of the firm. He merely lends his name to the firm to be used as partner. Thus, he has no contractual relationship with other partners. But he his equally held liable to the third parties for the activities of the firm.
b. Partners in Profits only:
They are the partners who share the profit of the firm but are not liable for losses. He is equally liable to the third parties for the activities of other partners.
c. Minor Partner:
A minor partner is a partner who is not major. As a minor is not competent to contract, he cannot become a partner. With the consent of all other partners, he may be admitted to the benefits of the partnership.
d. Secret Partner:
He is a partner whose membership is kept secret from outsiders. He is liable for the debts of the firm like other partners.