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ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships

Amara and Bruno start trading together as a consultancy, sharing profits, but they never sign any written agreement and the jurisdiction has no special partnership statute displacing general principles. A dispute arises over how to share profits. Applying the usual default rule for a general partnership with no agreement on the matter, how should profits be shared?

Profits are shared equally. When partners have made no agreement on profit sharing, the default rule of general partnership law applies, and it ignores differences in capital contributed or time worked, so each partner takes an equal share.

  1. AIn proportion to the capital each contributed
  2. BEqually between the partnersCorrect
  3. CIn proportion to the time each devotes to the business
  4. DAs the partner who first started trading decides

Explanation

Where partners have not agreed how to share profits, the default rule in general partnership law is equal sharing, regardless of capital contributed or effort. Capital-based sharing would apply only if the partners had agreed it. Time devoted is irrelevant to the default rule.

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