Sleeping Partner Clause Samples

A Sleeping Partner clause defines the role and rights of a partner in a business who invests capital but does not participate in day-to-day management or operations. Typically, this clause clarifies that the sleeping partner is entitled to a share of profits and losses, but is not involved in decision-making or liable for the business's debts beyond their investment. Its core function is to delineate the boundaries of involvement and liability for passive investors, ensuring clarity and preventing disputes over management responsibilities.