Discuss the classification of Partnerships.

By trading
A partnership may be classified was
a. Non-trading partnerships- these partnerships whose activities are to offer services e.g.
legal, medical, accountancy, teaching e.t.c.
b. Trading partnerships – these are partnerships whose main activities are manufacturing,
purchasing or sales of goods.
2. By liability
General partnerships – are partnerships in which all partners may publicity act on behalf of the
firm and each partner individually be held responsible for the debts of the firm. Their properties
may be attached to clear the debts of their partnership.Limited partnerships – a partnership
whose activities of certain partners are limited. The personal liabilities of such partners (limited
partners) are limited to a certain amount stated. These amounts are normally equivalent to the
amount of their contributions.
NB the following conditions must be fulfilled for a limited partnership to be formed. The
partnership should not consist more than 20 partners.
? The partnership must consist one or more general partners.
? The limited partners are not liable to the partnership debts beyond his capital
contribution.
NB Restrictions of the limited partners.
1. Is entitled to inspect the books of the firm and examine the partnership state at any time.
2. The death, withdrawal bankruptcy of a partner shall not cause dissolution of a partnership
or the partnership can not be dissolved by a court order because of lunacy of the partner.
3. A limited partnership is only dissolved by the general partners unless brought through a
court order.
4. Any differences on partnership matters can only be decided by a majority of the general
partners.
5. With the consent of the general partners a limited partner may assign his/her shares in the
partnership to another person.
6. A person may be introduced into the partnership without the consent of the limited
partners.
3. By time duration
1. A temporally partnership ( joint venture partnership) – this is a partnership formed for a
specified period of time .Termination of the stated period or accomplishment of the
purpose may cause the partnership to come to an end.
2. Permanent partnership (partnership at will) – This is a partnership formed to carry the
business indefinitely .It does not have a fixed life of fulfilling its purpose
4. By activity
a) Active partner – this is a partner who is actively involved in the day to day management of
the partnership and may be paid a salary for these services. And the partner is held liable for the
debts of the firm.
b) A dormant /sleeping partner – does not take part of the day to day management of
the partnership but contributes capital, shares profits and is liable for the business debts
5. By capital contributed
a) Real partner – a partner who contributes capital into the business and whose name may
be used in relation to transactions of the business and enjoys the profits of the
partnerships.
b) Nominal partner – is a partner who has not contributed any capital to the business but
allows his or her name to be used in the business. They are usually influential persons
whose names can be used.
He is not fully liable to the partnership debts however is he presents himself to the public in a
manner that portrays him a general partner he will be held liable.
c) Quinsy-partners – a partner who has retired from the partnership but has left his capital
in the partnership business which is treated as a loan, he earns interest
6. By age
a) Majority partner – A partner who has attained the age of 18 years and above. Such a
partner unless stated to the centrally can be held liable for the partner.
i) Partner shares only profits and not losses since he didn’t participate in decision making
that may have caused such losses.
ii) The liability of the minor is limited only to the amount of capital contributed to the
business since any liabilities arising may not be part his decision making.
iii) The minor partners can act on behalf the partnership and such acts shall be binding on
the other partnership
iv) When the minor partner attains the age of majority he/she has up to six months to
decide whether or not to continue with the partnership. If he/she decides to stay, he has
full responsibilities and rights of a major partner.

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sharon kalunda answered the question on March 2, 2019 at 09:42