When there is no partnership agreement between partners, the Indian Partnership Act of 1932 applies. This means that the partners will share profits and losses equally, and they won't receive a salary or interest on their capital.
What happens in the absence of a partnership agreement?
Profit and loss sharing: Partners share profits and losses equally, regardless of how much capital they contribute
Interest on capital: Partners don't receive interest on their capital
Interest on drawings: Partners aren't charged interest on drawings they make
Interest on loans: Partners receive 6% interest per year on loans they advance to the firm
Salary and commission: Partners aren't entitled to a salary o...