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

Chen and Dalia are partners. Their partnership agreement is silent on how profits are shared. Chen contributed 80% of the capital and Dalia 20%. Under the default rules in the general law of partnership, how will profits be shared?

Profits are shared equally. When the partnership agreement says nothing, the default rule ignores the unequal capital contributions and the time worked, so Chen and Dalia each receive half of the profits.

  1. A80% to Chen and 20% to Dalia, in proportion to capital
  2. BEqually between Chen and DaliaCorrect
  3. CIn proportion to the time each spends working in the business

Explanation

Where the agreement is silent, the default rule is that partners share profits equally, regardless of capital contributed or work done. Sharing by capital would require an express or implied agreement.

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