Introduction of partnership Meaning and definition Types of partners Active / Managing partner Sleeping partner Nominal partner Partner by estoppel Partner in profits only Minor partner Secret partner Outgoing partner Sub partner Limited partner

4. INDEX
 Introduction
Meaning and Definition
Types of partners

5. • Partnership is a form of business organization wherein two
or more persons join together in order to carry out
business. A partnership can be considered as an
improvement of “sole proprietorship” wherein a single
person carries out his business with his individual resources,
skills and efforts.

6. According to Section 4 of the Indian
Partnership Act, 1932, a partnership is defined as a
relationship between two persons who mutually agreed
to share the profits and losses in the business.
Therefore, persons who have entered into an
agreement with one another are individually known as
“partners”.

7. • Active/Managing Partner
• Sleeping Partner
• Nominal Partner
• Partner by Estoppel
• Partner in Profits only
• Minor Partner
• Secret Partner
• Outgoing partner
• Limited partner
• Sub-Partner

8. An active partner mainly takes
part in the day-to-day running
of the business and also takes
active participation in the
conduct and management of the
business firm. He carries the
daily business activities on behalf
of other partners.

9. A sleeping partner is also known as a
“dormant partner”. This partner does
not participate in the day-to-day
functioning activities of the partnership
firm. A person who has sufficient money or
interest in the firm, but cannot devote his
time to the business, can act as a sleeping
partner in the firm. However, he is bound by
all the acts of the other partners.

10. A nominal partner does not have
any real or significant interest in
the partnership firm. In simple
words, he is only lending his
name to the firm and does not
have a voice in the management of
the firm.

11. A partner by estoppel is a partner who
displays by his words, actions or
conduct that he is the partner of the
firm. In simple words, even though he is
not the partner in the firm but he has
represented himself in such a manner
which depicts that he has become a
partner by estoppel or partner by
holding out.

12. This partner of a firm will only share the
profits of the firm and won’t be liable
for any losses of the firm. Moreover, if a
partner who is in “partner in profits
only” deals with any of the third parties or
outsiders then he will be liable for the acts
of profit only and not any of the liability.

13. A minor is a person who is yet to attain the
age of majority in the law of the land.
According to Section 3 of the Indian
Majority Act, 1875 a person is deemed to
have attained the age of majority when he
attains 18 years of age. However, a minor
can also be appointed to claim the benefits
of the Partnership.

14. In a partnership, the position of secret
partner lies between the active
and sleeping partner. The
membership of the firm of a secret
partner is kept secret from the
outsiders and third parties. His
liability is unlimited since he holds a
share in profit and shares liabilities for
losses in the business. He can even
take part in working for the business.

15. An outgoing partner is a partner who
voluntarily retires without
dissolving the firm. He leaves the
existing firm, therefore he is called as
an outgoing or retiring partner.

16. A limited partner is a partner whose
liability is only upto the extent of
his contributions for the capital
of the partnership firm.

17. A sub-partner is a partner who
associates someone else in his share of
the firm. He gives a part of his
share to the person. It is pertinent
to note that, the relationship is not
between the sub-partner and the
partnership firm but is between him
and the partner.

18. Retrieved from…..
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This article is written by Sparsh Agarwal