A Study On Dormant Partnership

Dormant Partnership, as a particular partnership, was derived from the Arabian Commenda dating back to the middle ages. It then evolved into an accepted partnership in various countries or regions typified by Germany, Japan, France and Taiwan.On the basis of legislative definitions of some jurisdictions as well as research of the academy, a Dormant partnership is a particular partnership in which one party invests in an undertaking owned by the other party and shares profits or losses of the investments. The investing party, as a Dormant partner, will have his invested capital transferred to the partnership and subject to control of the business manager, with he himself independent of the managerial issues. The investor, however, bears limited liability up to the amount of his investment.This essay, based on a review of Dormant partnership mechanism and an analogous approach, derives an analysis of Dormant partnership mechanisms confirmed some jurisdictions, especially those where civil law system is in practice. With a comparison to some confusing notions, this essay highlights the distinctive features of a Dormant partnership. The essay ends up with an endeavour to address the challenge of legislative bases for a Dormant partnership on the basis of the civil law principles, accompanied with suggestion on prospective improvements on China's legal texts on this topic.This essay, based on a review of Dormant partnership mechanism and an analogous approach, analyzes Dormant partnership mechanisms confirmed some jurisdictions, especially those where civil law systems are in practice. With a comparison to some confusing notions, this essay highlights the distinctive features of a Dormant partnership. Finally, the essay addresses the challenge of legislative bases for a Dormant partnership on the basis of the civil law principles, accompanied with suggestions on prospective improvements on China's legal texts on this topic.The essay is comprised of three sections, introduction, main body and conclusion.The introduction reveals the existence of the Dormant partnership in our current economy and clarifies its functions. The inconsistency in verdicts indicates a necessity of legal clarity.The main body consists of three chapters:Chapter 1 defines a Dormant partnership. This chapter reviews the origin and evolvement of a Dormant partnership, with its legislative cases in jurisdictions as well as a comparison with related notions. The contents of the Dormant partnership in civil law systems are also summarized.Chapter 2 refers to the Dormant partnership practice in China, with an analysis on its legitimacy, the absence of legislative clarity and challenges in judicial activities.Chapter 3 discusses an approach to address the above-mentioned challenges at the absence of sufficient legislative support, followed by suggestions on future improvements in legislative issues. The conclusion reiterates the necessity of the Dormant partnership in China as well as the urgency to address disputes on this field.