Mention Two types of partners and explain them. – NABTEB QUESTION

Types of partners are:

General partner, limited partner, active partners, sleeping or dormant partner and quiz partner or Nominal partner.

i. General partner: This is a partner who is entitled to take full share in the administration and management of the partnership. He has unlimited liability.

ii. Limited partner: This is a partner who is prevented from taking any active part in the management of the business. He is a partner whose liability is limited to the extent of his shares.

iii. Active partner: This is a partner who has invested capital sum in the business and also take an active part in the daily conduct of the business for its success.

iv. Sleeping or Dormant partner: A sleeping or dormant partner is one who has capital invested in the firm, but takes no actual part in the conduct of the business. His name may or may not appear in the list of partners in the business name.

v. Quiz or Nominal partner: This is a partner who contributes only his name to the formation of the business in order to enhance the goodwill and reputation of the firm. He must not take part in the management of the business.