Two partners have no partnership agreement. Under the Partnership Act 1890 which rule applies?
Answer and explanation
Correct answer: B. Profits are shared equally and no interest on capital or salary is payable
- Step 1: The Act sets default terms that apply where partners have not agreed otherwise.
- Step 2: Partners share profits and losses equally, with no salaries and no interest on capital.
Answer
Profits are shared equally and no interest on capital or salary is payable.
Why not the others: Capital contributions do not affect the default sharing ratio. There is no default interest on capital, though a partner's loan attracts 5% a year. Hours worked do not set the default ratio.
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