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

Under the law of partnership in India, a person who lets the firm and the public believe that he is a partner, by his words or conduct, although he has not actually joined the firm, is called:

Such a person is a partner by holding out, also called a partner by estoppel. He is not a real partner but, by his words or conduct, leads outsiders to believe he is one, so he becomes liable to those who rely on that representation.

  1. ASleeping partner
  2. BPartner by holding out (partner by estoppel)Correct
  3. CNominal partner in the sense of a minor beneficiary
  4. DSub-partner

Explanation

A person who represents himself, or knowingly allows himself to be represented, as a partner becomes liable to third parties who act on that representation. He is known as a partner by holding out or by estoppel. A sleeping partner is a real partner who simply does not take active part in the business, so that option is wrong.

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