Introduction:
In the realm of partnerships, there are two different types of partners: nominal partners and partners by holding out. These terms refer to individuals who are associated with a partnership but may have varying degrees of involvement and liability. Understanding the difference between nominal partners and partners by holding out is crucial for legal and practical purposes.

Nominal Partner:
A nominal partner, also known as a partner in name only, is someone who is listed as a partner in the partnership agreement but does not have any actual involvement in the business operations or decision-making process. They are essentially a passive partner who does not contribute to the partnership in terms of capital, labor, or management.

Key Points:
- Nominal partners have their names included in the partnership agreement for various reasons, such as prestige, goodwill, or to fulfill legal requirements.
- They do not have any authority to make decisions on behalf of the partnership or participate in the day-to-day operations.
- As nominal partners have no active involvement, they are generally not liable for the partnership's debts or obligations.
- However, if a nominal partner actively participates in the business or represents themselves as a partner, they may be held liable as a partner by holding out.

Partner by Holding Out:
A partner by holding out, also referred to as an ostensible partner, is someone who may not be an actual partner but presents themselves as one to the public, leading others to believe they have a partnership relationship. This can be done through actions, words, or even misleading conduct.

Key Points:
- An ostensible partner holds themselves out as a partner, and this can be implied through their behavior, advertising, or representations made to others.
- Despite not being an actual partner, they may have the authority to bind the partnership in contracts or transactions.
- The legal concept of partner by holding out is designed to protect the interests of third parties who rely on the representation of a partnership relationship.
- If someone reasonably believes a person to be a partner based on their actions or representations, they can hold that person liable as a partner, even if they were not officially designated as one in the partnership agreement.
- A partner by holding out is equally liable for the partnership's debts and obligations as actual partners, irrespective of their official status.

Conclusion:
In summary, the main difference between a nominal partner and a partner by holding out lies in their level of involvement and liability within a partnership. While a nominal partner is listed in the partnership agreement but lacks active participation, a partner by holding out may not be an actual partner but presents themselves as one to the public. Understanding these distinctions is essential for legal purposes and to ensure clarity in the roles and responsibilities of individuals associated with a partnership.