Types of partnerships, types of partners and position of minors

Presented for the partial fulfillment of the Legal aspects of business course, under

Prof. D.M. DamleBy

SUMIT SAXENA (PGPM-15-139)ROHIT JAIN (PGPM-15-106)PRATEEK VYAS (PGPM-15-094)NIKET RATHI (PGPM-15-085)SHREYAS SHRIGANDHA (PGPM-15-131)

PARTNERSHIPS - IN TERMS OF PROFIT

•When partners divide responsibility and for management and liability as well as shares of profit and loss.•For example, a real estate office employing 20 agents may be owned by a general partnership consisting of five of those agents

General Partnership

•Similar to General partnership except that in addition to general partner, there are one or more Limited partner.•For example A,B and C start a bookstore ,in which A can be a general partner and B and C can be limited partners. In this case, A will take care of day to day operations and B and C have limited liability.

Limited Partnership

•A partnership in which some or all partners have limited liability and one partner is not responsible for the misconduct or wrongdoing of other partner.•For example, Mostly accounting and law firms are LLP firms

Limited Liability

Partnership

TYPES OF PARTNERSHIPS• Partnership for a Fixed Term– Where Partners are free to fix the duration of

Partnership• Particular Partnership– Where person becomes partner for any particular

adventure or undertaking• Partnership at Will– No provision made by contract between the

partners

ACTIVE PARTNER

•Actively and effectively involved as a partner•Responsible for day-to-day business decisions of the firm•Liable for the debts of the firm.•Representative/agent of other partners.•Authority to bind the firm and other partners in ordinary course of business.•Notice of retirement required to be given to general public either by the partner or the firm.

SLEEPING PARTNER

•No active interest in affairs and in conducting business of the firm•Invests capital and shares profit of the firm.•Liable to debts as an actual partner.•Liable for actions of the firm.•Normally unknown to third parties.•Need not to give notice of his retirement from the firm.

NOMINAL PARTNER

•Interest in success of the firm.•Legally not a partner, neither owns a part of the firm nor actively participate in the management affairs of the firm.•Often a well known and well connected individual, whose name lends credibility & recognition to the firm.•Often paid a fee for his services.•Liable for all he acts of the firm.

TYPES OF PARTNERS

PARTNER BY HOLDING OUT

•Legally not an actual partner.•Allows himself to be represented as a partner in the firm•Liable for the debts of the firm to third party.•To save himself from liability of the firm, he must issue a notice denying his position in the firm.

PARTNER IN PROFITS ONLY

•Entitled to receive a certain share of the profit and is not liable to losses.•Not allowed to take part in the management of business.•Unlimited liability towards third parties.

SUB-PARTNER

•A person who makes an agreement with an existing partner to share its profit.•No rights against the firm and not liable for the debts of the firm.

SECRET PARTNER

•A person who does not want to share his relationship with the firm to general public.•Contributes capital•Participate in management.•Shares profits and losses.

TYPES OF PARTNERS

MINOR’S POSITION IN A PARTNERSHIP

MINOR’S DECISION

• Is Richie Rich can be involved in management decisions?

• Section 11 – Contract ACT • Can be admitted to the profits and

benefits of partnership (Section 30)

• Consent from all partners of the firm.

• At least 2 major partners before a minor is admitted.

RIGHTS OF A MINOR

• To share Profits• Property and profits of the firm

• To have access to Accounts• Inspect and Copy any of the

accounts of the firm only.

• To Sue• Only on serving his connection

with firm

• To Elect to become a Partner

• To Elect not to become a partner

LIABILITIES OF A MINOR

• His Share• Not Liable for the acts of the firm• Cannot be declared or adjudged

insolvent• Personal Liability• After attaining majority and he

elects to become a partner, he becomes personally liable as other partners.

• Partner by holding out• After attaining majority and

before giving public notice