"Partners in a firm may be classified into various types based on the extent of their liability. ” Describe the following: (i) Dormant Partner (ii)…

Sleeping or Dormant Partner: It is a person who is a partner by agreement, and who does not actively take part in the conduct of the partnership business. They share profits and losses and are liable to the third parties for all acts of the firm. They are, however not required to give public notice of their retirement from the firm. Nominal Partner: A person who lends his name to the firm, without having any real interest in it, is called a nominal partner. He is not entitled to share the profits of the firm. Neither he invests in the firm nor takes part in the conduct of the business. He is, however, liable to third parties for all acts of the firm. Partner in profits only: A partner who is entitled to share the profits only without being liable for the losses is known as the partner for profits only and also liable to the third parties for all acts of the profits only. Partner by holding out (Section 28 of the Indian Partnership Act,1932): Partnership by holding out is also known as partnership by estoppel. Where a man holds himself out as a partner, or allows others to do it, he is then stopped from denying the character he has assumed and upon the faith of which creditors may be presumed to have acted. It is only the person to whom the representation has been made and who has acted thereon that has right to enforce liability arising out of ‘holding out’.