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CSEET · Business Laws and Management · Elements of Law relating to Partnership and Limited Liability Partnership

Match the partner with the description. (1) Active partner (2) Sleeping partner (3) Nominal partner (4) Partner in profits only. Descriptions: (P) Shares profits but does not take part in the business (Q) Takes part in conducting the business (R) Allows his name to be used without having a real interest in the firm (S) Shares profits but not losses as between partners and is still liable to third parties.

The correct matching is Active partner with Q, Sleeping partner with P, Nominal partner with R, and Partner in profits only with S. Active partners manage the business, sleeping partners only share profit and liability, and nominal partners merely lend their name.

  1. A1-Q, 2-P, 3-R, 4-SCorrect
  2. B1-P, 2-Q, 3-R, 4-S
  3. C1-Q, 2-R, 3-P, 4-S
  4. D1-Q, 2-P, 3-S, 4-R

Explanation

An active partner conducts the business (Q). A sleeping partner shares profits and liability but does not take part in management (P). A nominal partner lends his name without real interest (R). A partner in profits only shares profits and not losses inter se, though liable to outsiders (S). Option 1-P, 2-Q swaps the first two.

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