Following are the various types of partners:
i. Active Partners:
Partners who take active part in the conduct of day‐to‐day transactions of the firm are called Active Partners. These partners perform the business activities on behalf of other partners.
ii. Sleeping Partners:
A Sleeping Partner is also known as Dormant Partner. Sleeping or Dormant Partners are those, who do not take active part in the management of the business. Such partners only contribute capital in the firm and are bound by the activities of other partners. However, they share in the profits and losses of the business.
iii. Nominal Partners:
Nominal partners are those who lend their name to the firm but do not have interest in the business. They do not make any capital contribution and are not entitled to take part in management, but are liable to third parties, like the other partners.
iv. Minor Partner:
A minor is a person who has not completed 18 years of age. A minor cannot become a partner because he is not qualified to enter into a contract. However, he may be admitted to the benefits of partnership with the mutual consent of all the partners. His liability is limited to the extent of his share in the capital and profits of the firm.
v. Partner in Profits only:
This type of a partner only shares in the profits of the firm. However, his liability for the firm’s debts is unlimited. He is not allowed to take part in the management of the firm. A partnership firm may associate with such a partner for their money and goodwill.
vi. Partner by Estoppel:
A Partner by Estoppel neither contributes capital nor is entitled to any share in the profits. He is actually not a partner in the firm. However, any person who represents himself in front of a third party as a partner of the firm becomes a Partner by Estoppel. He becomes liable to the third parties that presume him to be a partner of the firm.
What is Partnership Deed?