Which of the following type of partner has limited liability?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- None of the above.
No partner has limited liability. Every partner has unlimited liability.
|
Type |
Capital contribution |
Management |
Share in profits/losses |
Liability |
|
Active partner |
Contributes capital |
Participates in management |
Shares profits/ losses |
Unlimited liability |
|
Sleeping or dormant partner |
Contributes capital |
Does not participate in management |
Shares profits/ losses |
Unlimited liability |
|
Secret partner |
Contributes capital |
Participates in management, but secretly |
Shares profits/ losses |
Unlimited liability |
|
Nominal partner |
Does not contribute capital |
Does not participate in management |
Generally does not share profits/losses |
Unlimited liability |
|
Partner by estoppel |
Does not contribute capital |
Does not participate in management |
Does not share profits/losses |
Unlimited liability |
|
Partner by holding out |
Does not contribute capital |
Does not participate in management |
Does not share profits/losses |
Unlimited liability |