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Types of Partners |
| The partners of
a firm are broadly divided into three main categories. |
(1) General
Partners. |
(2)
Special Partners. |
(3) Other Partners. |
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Basically
all the partners of a firm are general partners. General
partners we those whose liability is unlimited in the
f General partners are of two types (a) Active partner,
and (b) Sleeping partner. |
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(a)
Active Partner |
A
partner who takes active part in the day to day management
of the business is cared an active partner. An active
partner (also called working partner) may work in different
capacities such as manager, organizer, adviser, controller
of all the affairs of the firm. The active partner is
rewarded as per agreement between the partners. |
| (b)
Sleeping Partner |
A
sleeping partner is one who contributes capital, shares
profits and losses of the firm but takes no part in
the day to day management of the affairs of the firm.
A person, who has money to invest but cannot spare time
for the business, may become sleeping partner. A sleeping
partner is liable for the liabilities of the business
like other partners. |
| (2)
Special Partners |
Special
partners are partners whose liability is limited to
the extent of their capital contributed in the firm.
They are only found in limited partnership. The special
partners cannot take part in the management of the business
of the firm. In Pakistan limited partnership is not
recognized. |
| (3)
Other Partners |
The
other types of partners sometimes found in a firm are
as follows. |
| (a)
Secret Partner |
A
partner who takes active part in the affairs of a business
but is not known to the public as a partner is called
Secret partner”. He, like other partners, is liable
to the creditors of the firm to an unlimited extent
He shares profits according to the agreement signed. |
| (b)
Nominal Partner |
nominal
partner lends his name for the goodwill and credit worthiness
to the firm. He neither contributes capital nor takes
active part in the management of business. Such partners
are called nominal partners. Nominal partners are liable
for the debts of the firm. |
| (c)
Minor Partner |
Partnership
is a contract and a contract with minor is void. Under
Section 30 of Partnership Act, a minor is not able to
enter into a contract and so he cannot become a partner
of a firm. He can, however be admitted to the benefits
of a firm with the consent of other members and that
too n a business which is already operating. His liability
remains limited to the extent of his share in the capital.
On attaining majority, he has to choose whether he has
to continue as a partner or not. |
| (d)
Partner at Will |
type
of partner will continue so long the partners have mutual
faith, trust and confidence among them. |
| (e)
Partners In Profit Only |
If
a partner is entitled to receive certain share of profit
and is not held liable for the losses, he is known as
partner in profit only. He is not allowed to take part
in the management of the business. |
| (f)
Partner by Estoppel |
There
is another minor type of partner which is called partner
by estoppel. If person styles the character of a partner
in a business before a third party (outsiders) by words
or in writing or by his act, he is called a partner
by estoppel. The third party mistaking him as a partner
in the business advances loans on his creditability,
that person would be personally responsible for the
liability attaching to the position of a partner The
partner by estoppel would, however, not be entitled
to any right like other partners in the business. For
example Mr. Hamid is a rich man and is not a partner
in a firm named Three Star Carpets. Mr. Hamid makes
a false statement to Mr. Rauf, that he is a partner
of the firm Three Star Carpets. On this impression Mr.
Rauf sells carpets worth Rs. one million to “Three
Star Carpets” on credit. The firm is not able
to pay the amount of Rs, one million. Mr. Rauf can recover
the amount of Rs. one million from Mr. Hamid, Mr. Hamid
here is a partner by Estoppel. |
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