Question

​Absence of Partnership Deed
1. A and B are partners. They do not have any agreement (Partnership Deed). What should be done
in the following cases:
(i) A spends twice the time that B devotes to business. A claims that he should get a salary of
3,000 per month for his extra time
(ii) B has provided a capital of 25,000, whereas A has provided 5,000 only as capital. A, however,
has provided Rs 15,000 as loan to the firm. What interest (if any) will be given to A and B ?
(iii) B wants that profit should be distributed in the ratio of capitals but A wants that it should be
distributed equally.

Answer 1

Answer:

(i) No, because in absence of partnership deed the profits among partners will be Shared equally in the same way this will happen with Salary

(ii)No interest on capital would be allowed to partners. If there is an agreement to allow interest on capital it is to be allowed only in case of profits.If a partner has provided any Loan to the firm, he would be paid Interest at the rate 6% p.a. This interest on loan is a charge against profits i.e. it is to be allowed even if there are losses to the firm.

(iii) The profits will be distributed equally...