can any one explain the difference between Nominal partner and partners by estoppel?

Question

Answer

nominal partner is for namesake onlywhile partner by estoppel is actually not a partner  has became partner by some situations

Answer

If the partners in a firm request a celebrity to use the fame if the celebrity agrees to it with nominal rate of profit then he becomes ''NOMINAL PARTNER'',
If a person declared that he is a partner even though he is not if the partners of firm will silent then the person is known as ''PARTNER BY HOLDING OUT''
The liability of both Nominal partner and Partner by estoppel is unlimited even though are not real partners

Answer

Nominal Partner:

A nominal partner is someone who is not actually a partner in a partnership but is portrayed as one to the outside world. This individual does not contribute any capital or actively participate in the management or operations of the partnership. The purpose of having a nominal partner is often to give the impression that the partnership has more members or to fulfill legal requirements.

Partners by Estoppel:

Partners by estoppel, also known as apparent partners, are individuals who are not actually partners in a partnership but are held liable as if they were partners due to their actions or representations. This concept is based on the legal principle of estoppel, which prevents a person from denying or contradicting a previous statement or action if it has caused someone else to rely on it.

Differences:

1. Role and Involvement:
- A nominal partner has no real role or involvement in the partnership, whereas partners by estoppel may be actively involved in the partnership's operations.
- Nominal partners do not contribute capital or participate in decision-making, while partners by estoppel may contribute capital or engage in management activities.

2. Representation:
- A nominal partner is intentionally portrayed as a partner to the outside world, even though they do not fulfill the requirements of being a partner.
- Partners by estoppel may not be intentionally represented as partners, but their actions or representations give others the impression that they are part of the partnership.

3. Liability:
- Nominal partners are not personally liable for the partnership's obligations or debts since they are not actual partners.
- Partners by estoppel, on the other hand, can be held personally liable for the partnership's obligations and debts if their actions or representations lead others to believe they are partners.

4. Legal Status:
- Nominal partners have no legal standing as partners and do not have the rights or responsibilities that actual partners possess.
- Partners by estoppel are legally considered as partners, even though they may not have fulfilled the formal requirements to be recognized as such.

In summary, a nominal partner is someone who is portrayed as a partner but has no real involvement or liability in the partnership. Partners by estoppel, on the other hand, are individuals who are not actual partners but are held liable as if they were due to their actions or representations.

Similar CA Foundation Doubts

Which of the following is not a kind of partner

Which of the following is not a kind of partner

Can you explain the answer of this question below:Which of the following is not a kind of partner:A:Dormant partnerB:Partners in losses onlyC:Partner by estoppelD:Nominal partnerThe answer is b.

what is the difference between nominal partner partner by estopable and partner by holding out

In a partnership where partners agree to give share in profit but without any rights of the firm such partner is

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