discuss the various kinds of partners in partnership firm?
“The parsons who enter into partnership through agreement are known as partner”
Partners are the persons who carry on some business by mutual agreement, which is looked after by all of them or any one of them who acts for all. They share the profit of such business. Each individual is known a partner.
The partnership act 1932 (section (4)) define partner:
“Person forming partnerships are individually known as partner and collectively a firm”
Classification of partners
The partners are classified in several different ways, depending upon their extent of liability, participation in management, share of profit and other factors. Partners may be classified into the following kinds:
Accordingly to age
Adult partner means a partner whose age is 18 years or more and he is admitted to share the profit or loss of the firm.
Any person who has not attained the age following majority according to the law of the country cannot become a partner in the firm. But all the partner with their mutual consent can admit him only in the benefits of the firm’s business. If any person is admitted so, he will be minor partner. If a minor partner becomes an adult then he has to decide his status as member within six months after attaining maturity
According to experience
A partner who has more investment in the firm, who receive a relatively larger percentage of profits and who due to experience, age capability and other skills, assumes a major role in the management the business in called senior partner.
The partner who have limited experience of business and give invested small amount following capital in the business of the firm, are called junior partners.
According to liability
Limited partner is a partner whose responsibility of loos restricted to his share of capital. He cannot take active part in the management of firm.
Unlimited partner is a partner whose liability of loss is unlimited. It means the personal property of the partner can be sold to pay the debts of firm.
According to participating
It is called working managing or ordinary partner. “A partner who takes an active part in the management of the firm is called active partner”. He takes much interest in the affairs of the firm. They contribute their share of capital and are also responsible for liabilities of the firm. Such a partner must give public notice of his retirement from the firm in order to free himself from liability for acts after retirement.
These are the partners who are not known to the public as partner but they take active part in the management of the firm. So they are called secret partner. He pays his share in the capital and is liable to settle the creditors of the firm.
These are the general partners who are known to the public as partner but do not take part in management and affairs of the business.
The sleeping partners are partners who neither take part in the management of the firm nor know to the public as partners. Such partner brings only capital in the business. He is also liable to the creditors of the firm like other partners. He is not required to give notice to general public about his retirement from the firm.
These are the partner who neither contribute capital nor take part in the management of the firm, but they allow the firm to use their name as partners. They also do not share the profit of the business but they are liable to third parties.
In addition to above these are further kinds of partner according to their importance and functions.
A person who is newly admitted into the business with the consent of all the partners called new partner. He is not liable for any act of the firm done before his admission. [Section 31(2)]
Partner in profit only
He is an individual who gets a share of profits only without being liable for the losses. He does not participate in the management of the business.
A partner who receives salary for the services rendered in business in addition to his share in profit of the firm named as salaried partner.
A person who leaves the firm due to certain event or reason is known as retired partner. In this situation the remaining partner can continue the business. Retiring partner is liable for all the obligations and debts incurred before his retirement. But he will also be liable to third party even for future transactions if he does not give a public notice of his retirement. [Section 32]
The partner who is unable to pay business debts is called insolvent partner. The loss of insolvent partner is to be shared by the solvent partners in the ration of their capital.
The partner whose life has expired is known as deceased partner. The share of capital and profit of such partner is paid to his legal heirs in lump sum or in instalments.
Holding out partner
When any person is actually not partner of the firm but is known to the public as partner and he does not deny the fact that he is a partner is called holding out partner. He is liable to all those parties who have given credit to the firm on his credit standing.
The above mentioned were the classification of partners according to various characteristics. All the partners do the works by the mutual consultation for achieving the common objective of the organization.