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Simple English definitions for legal terms
sleeping partner
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A quick definition of sleeping partner:
A sleeping partner is someone who is a part of a business but does not take an active role in running it. They are also known as a secret partner because their involvement in the business may not be publicly known. Even though they are not actively involved, they still share in the profits and are responsible for any debts the business may have.
A more thorough explanation:
Definition: A sleeping partner is a type of partner in a business who is not actively involved in the day-to-day operations of the business but shares in its profits and losses. This type of partner is also known as a secret partner.
Example: John and Jane start a business together. John is actively involved in running the business, while Jane invests money but does not participate in the management of the business. Jane is a sleeping partner.
This example illustrates how a sleeping partner is someone who invests in a business but does not take an active role in its management. They still share in the profits and losses of the business, but their involvement is not publicly disclosed.