In view of the nature of work and rights and duties, partners may be classified into some categories. All kinds of partners in a partnership business are as follows:
Kinds of partners
1. General partners: General partners are those partners who do not share in the management and administration of the business. Sometimes they are called active partners because they actively take part in the management.
2. Dormant partners: Dormant partners are those who do not share in the management and administration of the business. They remain silent after contributing to the agreed amount of capital.
3. Nominal partners: A nominal partner is a person who has permitted others to believe that he is a partner. He is not a partner by virtue of an agreement but by virtue of being represented to the outsiders as being a partner. He does not contribute to any capital.
He has shared in the management. He is also known as a self-styled partner as he permits himself to be represented as a partner or hold himself to be a partner is a partnership business and thereby liable to a creditor who granted credit believing him to be a partner.
4. Limited partners: A limited partner is a person whose liability is limited to the among that he has paid to the business. He cannot be asked to pay the debts of the business.
5. Quasi partners: A quasi partner is a person who has retired leaving his capital in the business as a loan. On this loan, he gets interested only. The rate of interest, however, varies with the amount of profit.
Hope this article clear your concept regarding business partners. Do you have any other queries please feel free to comment below.
Other Content of Partnership Business:
- What is a Partnership Business?
- Elements of Partnership Business
- Different Types of Partnership Business
- Features / Characteristics of Partnership Business
- Importance of Partnership Agreement
- Contents of Partnership Agreement
- Advantages and Disadvantages of Partnership Business
- Registration of Partnership Business
- Consequences / Effects of Partnership Registration
- Dissolution of Partnership Business