There are different kinds of partners and they may be classified in the following manner: 1. Active Partner 2. Sleeping or Dormant Partner 3. Nominal Partner 4. Partner in Profits Only 5. Minor as a Partner 6. Incoming Partner 7. Outgoing Partner 8. Partner by Estoppel or Holding Out.
Kind # 1. Active Partner:
A partner who is actively engaged in the conduct of a business is known as active partner. He may be called a working partner. He takes an active part in the management and administration of the business. His liabilities are unlimited.
Kind # 2. Sleeping or Dormant Partner:
A sleeping partner is one who contributes capital, shares profits and contributes to the losses of the firm but does not participate in the working of the business. He is liable for the liabilities of the firm like other partners. The term ‘sleeping partners’ implies one who is neither an active partner nor known to the public as a partner.
Kind # 3. Nominal Partner:
A nominal partner is one who does not contribute any capital or share in profits but lends his name and credit to the partnership firm. A nominal partner is liable to third parties who deal with the firm on the supposition that he is a partner in the firm.
Kind # 4. Partner in Profits Only:
ADVERTISEMENTS:
A partner sharing the profits of the business without making himself responsible for losses, if any, is known as partner in profits only. He contributes capital and is also liable to the third parties like other partners. Such partners are not allowed to take part in the management and administration of the business.
Kind # 5. Minor as a Partner:
A minor cannot become a partner in the partnership firm because according to Indian Contract Act, a minor cannot enter into a contract. However, a minor may be admitted to the benefits of partnership with the consent of all the partners.
Kind # 6. Incoming Partner:
A person who is admitted as a partner in an existing partnership is called an incoming partner. A new person can be taken as a partner with the consent of all the partners. Incoming partner is not liable to the creditors of the firm for anything done before he became a partner.
Kind # 7. Outgoing Partner:
A partner leaving the existing firm is known an outgoing or retiring partner. An outgoing partner is liable for the debts and the obligations incurred before his retirement and will be liable for future obligations only if he fails to give public notice of his intention to retire from the partnership firm.
Kind # 8. Partner by Estoppel or Holding Out:
ADVERTISEMENTS:
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 or by holding out. A partner by estoppel or holding out shall be liable to the third parties who deal with the firm on the supposition that he is a partner even though he is not a partner. He does not contribute anything to the firm.