Explain different types of partners....

1.Active partner: A partner who contributes capital and also actively participates in the management and affairs of the business is called an active partner. He shares the profits and losses of the business and his liability is unlimited.
2.Sleeping partner: A partner who contributes capital but does not participate in the management and affairs of the business is called a sleeping partner. He shares the profits and losses of the business and has unlimited liability.
3.Secret partner : A partner whose association with the firm is not known to the general public is called a secret partner. He also contributes capital, shares profits and losses, participates in the management of the business and has unlimited liability.
4.Nominal partner : A partner who allows the
partnership firm to use his/her name but does not contribute any capital or take part in the management and affairs of the business. He does not share the profits and losses of the firm but he is liable to the creditors for the repayment of the firm’s debts.
5.Partner by estoppel: Partner by estoppel is a partner who, through his/her conduct or behaviour, gives an impression that he/she is a partner of a particular firm. Although such a person neither contributes capital nor participates in the management of the business, in the eyes of the third party he is known as a partner of that firm. Hence, he too is liable for the debts of the firms.
6.Partner by holding out : A person, who is not actually a partner of a firm but knowingly allows himself/herself to be represented as a partner of the firm is called a partner by holding out. Such a person can be held liable for the repayment of debt extended to the firm due to such representation. In order to avoid this liability, such a person should immediately clarify his position to the third party, stating the fact that he is not a partner. Failure in clarifying same would make him liable to the third party for repayment of any debts taken by the partnership firm.