Question

Chloe and Tamara start a vintage fashion boutique. While both invest equally in the store and are entitled to equal profits, it is Tamara who looks after the day-to-day business transactions and manages the store. Chloe does not actively participate in managing the store, and her personal wealth is not at risk in case the business suffers losses. In this scenario, Chloe is a _____.

Answer 1

Answer:

Silent partner.

Explanation:

Chloe is a silent partner in this vintage fashion boutique. A silent partner or sleeping partner is that who invest in the business and have still shares in the profits and losses of the business, but who is not involved in day-to-day business transactions and in its management and his/her personal property is not at risk in case the business suffers losses as here Chloe and Tamara invested equally but Chloe is not taking part in the management of the business but still shares the profit and loss occurred but her personal property is not at risk in case of firm's insolvency.