Kinds Of Partnership

Presentation
Contract -II
Professor – Shilpa Jadhav mam
Presentation by- Vijay Deshmukh
Types of Partners
Here we will look at six types of partners we come
across on a regular basis. This list is not exhaustive,
the Partnership Act does not restrict any unique
kind of partnership that the partners want to define for
themselves. Let us take a look at some of the
important types of partners.
 01
Active Partner/Managing
Partner
•Definition: An active partner, also known as an Ostensible Partner, actively
participates in the firm's operations and business management.

•Role: The active partner carries out daily business activities on behalf of all
partners and acts as an agent for all partners in ordinary business matters.

•Retirement: When an active partner wishes to retire, they must give public
notice. This notice absolves them of liability for acts done by other partners
after retirement. Without such notice, the retiring partner remains liable for all
partnership acts, even after retirement.
 02
Dormant/Sleeping Partner
•Definition: A dormant or sleeping partner does not
participate in the daily operations of the partnership firm
and is not actively involved in its activities.
•Role: Despite not being involved in daily activities, the
dormant partner is still bound by the actions of other
partners and shares profits, losses, and capital contribution
like any other partner.
•Retirement: A dormant partner, upon retirement, is not
required to give public notice of retirement.
 03
Nominal Partner
Definition: A nominal partner does not have a real or
significant interest in the partnership and only lends their name
to the partnership.
Role: The nominal partner does not contribute capital to the
firm and does not share in the profits. However, the nominal
partner is liable to outsiders and third parties for acts done by
other partners.
 04
Partner by Estoppel
•Definition: If a person represents themselves as a partner
of the firm, either through words, actions, or conduct, they
cannot later deny that they are a partner.
•Role: Even if the person is not actually a partner, their
representation as a partner makes them a partner by
estoppel or partner by holding out.
 05
Partner in Profits Only
•Role: This partner shares only in the profits of the firm
and is not liable for any of its liabilities.

•Liability: Despite not sharing in the liabilities, this

partner is still liable for all acts concerning profits when
dealing with third parties.
 06
Minor Partner
•General Rule: According to the Contract Act, a minor cannot be a partner
in a firm.

•Admission to Benefits: However, with the consent of all partners, a minor

can be admitted to the benefits of a partnership. In this case, the minor
shares in the profits but is only liable for losses up to their share in the
firm.

•Decision at Majority: Upon attaining majority (turning 18 years old), the

minor partner has six months to decide whether to become a full partner.
This decision must be declared via public notice. Whether the minor
continues as a partner or decides to retire, a public notice is required in
both cases.
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 Kinds Of Partnership
Presentation
Contract -II