Match each type of partner in a commercial partnership with the statement that accurately describes their capital contribution, management rights, and legal liability status under commercial partnership law.
- Active PartnerContributes capital, participates actively in daily business conduct, and bears full, unlimited personal liability for partnership debts.
- Sleeping (Dormant) PartnerContributes capital and receives a share of profits, takes no active role in business administration, but retains full, unlimited personal liability for firm obligations.
- Limited PartnerContributes capital and receives a share of profits, is legally restricted from taking part in management, and has liability strictly restricted to the amount invested.
- Nominal PartnerContributes no capital and has no right to profits or management, but lends their name to the firm and remains liable to third parties who rely on that representation.
Answer
Active Partner pairs with full management rights and unlimited liability; Sleeping Partner pairs with no active management role and unlimited liability; Limited Partner pairs with no management rights and liability restricted to capital contributed; Nominal Partner pairs with no capital contribution or management rights but third-party liability due to lending their name.
Each partner type matches their specific legal standing: Active partners manage and face unlimited liability; Sleeping partners do not manage but still face unlimited liability; Limited partners exchange management rights for protection against debts exceeding their investment; Nominal partners contribute no equity but incur liability by lending their name.
Step-by-Step Solution
Key Concept
Classification, Rights, and Legal Liabilities of Partners