Legal Definitions - sleeping partner

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.