Types Of Partnership | Types Of Partners | Limitations Of Partnership

Types Of Partnership

(1) General and Limited Partnership:In the general partnership the liability of the partners is unlimited.On the other hand,limited partnership has two types of partners:firstly,general partner and secondly,special partner.The general partner's liability is unlimited,while that of special partner is limited.There should be at least one general partner in the limited partnership,which means a partner with unlimited liability.

(2) Partnership at will and Particular Partnership:Partnership at will can be formed to run the business for an indefinite period,while particular partnership can be formed for some specific object and it ends with the attainment of pre-determined specific object.

(3) Legal And Illegal Partnership:Although it is not essential to get the partnership registered under indian partnership act,1932 in order to bring it into existence,yet the partnership organisations have to work in accordance with provisions of the Act.Those partnerships which work according to the provisions of the Act are considered legal and are called legal partnerships.
On the contrary,partnership become illegal in the following conditions:
(i) If the purpose of the establishment of partnership is illegal,
(ii) If the business of partnership is against public policy,
(iii) If the number of partners reduces to one or exceeds the maximum limits,and
(iv) If there is any partner from an enemy country.

Types Of Partners

(A) Full-Fledged Partners

(1) Active :Those partners who take active participation in the administration of the firm are called Active Partners.Besides,they invest money in the firm and have a share in its profit and loss.They have unlimited liabilities.These partners act as agents of the fir.In otherb words,all other partners are responsible for their deals done as agents.They are also known as General or Ordinary Partners.

(2) Sleeping or Dormant Partners:Sleeping or Dormant partners are those who do not have an active participation in the administration but invest money,have an share in profit and loss and have unlimited liabilities.

(3) Secret Partners:A partner is known as a secret partner whose relation with the firms unknown to the general public.However,he has all the features like the rest of the partners.He invests capital,shares its profit and losses,takes part in management and has unlimited liability.

(B) Not Full-fledged Partners

(1) Nominal Partners:Those partners who neither invest money nor have a share in the profit and loss and also have no role in the administration of the firm are called nominal partners.The firm makes them partners to gain from their personal goodwill.

(2) Limited Partner:A person whose liability is limited to his investment in business is called limited partner.He has no right to take part n administration of the firm.

(3) Partner by  Estoppel or Holding Out:A person who has no partnership in the firm but his words or conduct highlights him as a partner is called a partner by holding out.

(4) Minor Partner:Any person lacking  the capacity of contract cannot become a partner.On this basis a minor cannot be a partner.But according to a provision in the Indian Partnership Act,1932 a minor can be a partner in the profit of the firm if all the other partners give their consent and he has limited liability.

(5) Partners in Profit Only:Such a type of partner is different from a minor partner.He only shares the profit of the firm.But he has unlimited liabilities like all the other partners.Such partner has no right to take part in the administration of the firm.

Thanks For Reading!!!
-Sujal Juneja
(Juneja Technology)

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