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LSDefine
Simple English definitions for legal terms
dormant partner
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A quick definition of dormant partner:
A dormant partner is a type of partner in a business who shares in the profits but does not actively participate in managing the business. They may not be publicly known and may not be involved in decision-making. However, they are still responsible for any debts the business incurs. Think of it like being a silent investor in a lemonade stand - you get a share of the profits, but you don't help make the lemonade or sell it.A more thorough explanation:
A dormant partner is a type of partner in a business who shares in the profits but does not actively participate in the management of the business. They are also known as a silent partner.
John and Jane start a restaurant business together. John is the chef and manages the day-to-day operations, while Jane invests money into the business but does not participate in the management. Jane is a dormant partner in the business.
This example illustrates how a dormant partner contributes financially to a business but does not have an active role in running it.