Partnership (Definition, Types of Partnership, Kinds of Partners )

Meaning of Partnership

Provision of section 1 of the act of 1980, defined partnership as a relation which subsists between persons carrying on a business in common with a view of profit. The relationship is voluntary and membership is between two to twenty people. These people combine their money, skill, goodwill, etc for the purpose of carrying out a business.

When partners are involved in banking enterprise, the number required by law is between two and ten.

Types of Partnership

1. General/Ordinary/Unlimited Partners: These partners have unlimited and may be personally liable for the debts of the business. They take an active part in the management of the business. Their powers and control of the business as agents are equal.

2. Limited Partners: The partner’s liability is limited to the amount of capital contributed and as stated in the deed of partnership.

Kinds of Partner

1. The general, active or unlimited partner: this partner contributes capital and takes an active part in the management of the partnership business.

2. The Dormant, Sleeping, or silent partner: he only contributes his capital to the business. He does not contribute to the management and control of the business.

3. The Nominal Partner: he does not contribute to the capital neither does he take part in the management of the business. He allows his name (goodwill)to be used since the public will like to associate with the firm because he is a part of it.

4. The Secret Partner: he contributes his capital, takes an active part in the management of the business but hides his identity from the public. He may be the brain of the success of the business but hidden in the eye of the law.