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

Ivan and Jana run a partnership with no provision in their agreement on salaries or interest. Jana works full time in the business, while Ivan is only a passive investor. Jana claims a salary for her extra work before profits are divided. What is the default position?

Jana is not entitled to a salary unless the partners agreed to one. The default rule gives no remuneration for work in the partnership, even where one partner works much more than the other.

  1. AJana is entitled to a salary because she works more than Ivan
  2. BJana is not entitled to a salary unless the partners agreed to oneCorrect
  3. CJana is entitled to a salary only if the business makes a profit

Explanation

Under the default rules, partners are not entitled to remuneration for taking part in the business. A salary must be agreed. Unequal work does not change this, and profit levels are irrelevant to the entitlement.

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