Types, Right and Duties of Partner

Types of Partner

• Active Partner
  The partner who has invested more in partnership business and directly involves in business activities is called active partner. They takes all responsibility of business, he/she bears unlimited liability, share the profit of business and devoted full time to the business. For the full-time involvement, active partners receive remuneration and for the investment, he will receive the share of profits.
• Sleeping Partner
  The partners who have invested money but don’t involve in business activity is called sleeping partner. A sleeping partner bears the loss of business, has unlimited liability and takes all other responsibility as like active partner but he/she is not directly involved in business activities.
• Nominal Partner
  The partner who has not invested money but nominated as a partner is called nominal partner. It doesn't bear any risk or loss of business. It is a special kind of partners who is nominated as a partner because of his reputation in society.
• Quasi Partner
  The partner who is retired from business but investment is not returned is called quasi-partner. This partner is neither liable for business activity nor has right over the profit of business after retirement.
• Limited Partner
  The partner whose liability is limited to his investment only is called limited liability. As like the active partner, limited liability partner shares profit, invest money and participate in business but the difference is that limited partners do not have unlimited liability as an active partner.
• Minor Partner
  The partner below the age of 16 years age is called minor partner. They are not allowed to sign the legal document of business because of this he can be a partner only under the guardianship of another partner.
• Sub Partner
  The partner who shares the profit of business with other partners is called sub-partners. It has co-investment (joint investment) with other partners. This is made with mutual agreement and understanding with other partners. There profits and loss of business are share by sub-partners according to agreements made internally by partners.
• Incoming Partner
  The partners who are going to newly enter in business is called incoming partners. The incoming partner is required to pay the premium amount to be a partner of existence business. The agreement between existence partners is required to enter a new partner.
• Outgoing Partner
  The partner who is going to retire from business is called outgoing partner. The outgoing partner can retire from the business by making an agreement with other partners. He can retire by selling his share to other partners or outside parties in the consent of existing partner. The outgoing partner is not liable for future liabilities of the partnership.
• Holding out - estoppel Partners
  The partner who represents himself as a partner but does not invest money in business is called holding out or estoppel partners. He is a partner only in the eye of law or creditors. This partner doesn't share profits and does not bear loss as well. Therefore, he has not any liability of the business.
• Secret Partners
  A Partners who invests money in the business and shares profit and losses but he doesn't like to be disclosed as a partner in front of the public is called secret partners. He provides all necessary helps assistant to business indirectly.

Rights of partner in partnership

• Right to manage business
  All the partners have an equal right to be involved in management and operation of the partnership business. A partner can involve in planning, decision making, organizing and controlling activities of the business.
• Right to express views and ideas
  All the partners have a right to give their ideas, knowledge, and experience by making any business decision. Such suggestion is discussed and decided with mutual consent of all partners.
• Right to inspect books account
  Every partner has right to inspect and take a copy of accounts and financial statements like trial balance, profit and loss account and balance sheet of business in a timely manner.
• Right to share profit
  Each partner is authorized to claim over a profit of a business. Profit is shared on the basis of a ratio of investment.
• Right to be indemnified
  All partners are authorized to get compensation for the loss and expenses made personally by partners for business.
• Right to proper use of property
  All the partners have a right to use a property of business for growth and promotion of business. A partner doesn't have right to use the property of the business for personal assistance.
• Right to join ownership
  All the partners have the right to claim joint ownership of the property of the business firms. All the partners have joint ownership of the property. So that one partner can't sell the property of the firm without a consent of other partners.
• Right to get retirement
  A partner has right to get retire from business in the consent of other existing partners.
• Right to bind other partners
  A partner has a right to demand loss (compensation) for the loss or damage occur to the business due to the negligence of other partners.
• Right to dissolve business
  A partner can purpose the dissolve of business if he does not see any future prospect.

Duties and Responsibility of partners

• Mutual confidence and understanding
  As the partnership starts with an agreement between the partners, it is the duty of the partners not to break confidence, agreement, and understanding between the partners.
• To share losses
  All the partners are required to share loss from business in the proportion (ratio) of their investment.
• Not to transfer interest
  It is the duty of partner not to transfer his/her ownership in business without the agreement of partner.
• To act within the scope of authority
  No partner is allowed to work beyond his/her authority. It is the responsible of the partner to perform within his authority.
• Not to demand remuneration
  Even the active partner is not authorized to demand remuneration if it is not mentioned in partnership deed.
• To indemnify the business
  The partner is required to compensate loss that has occurred in business because of his/her negligent.
• Not to run competitive business
  It is the most important responsibility of partner that he shouldn't run similar nature of business by himself.
• To maintain up to date account
  An active partner must maintain up to date financial state like profit and loss a/c, balance sheet etc. They must be provided on time as demanded by partners.
• Not to use property of business
  The property of business must be used for business purpose only. It is the duty of partner that he must not use for personal benefits.

References:

Khanal, Soma Raj, Surendra Thapa Aslami and Sitaram Dhakal. Business Studies. Kathmandu: Taleju Prakashan, 2067.

Pant, Prem R., et al. Business Studies. Kathmandu: Buddha Academic Publishers and Distributors Pvt. Ltd., 2010.