Default Rules Govern Partnerships Without Agreements

Steps:

• Identify that without a partnership agreement, statutory default rules from partnership law (e.g., Partnership Act) apply automatically.
• Recall key defaults: equal profit/loss sharing, no salaries for partners, interest on loans but not capital, and joint management rights.
• Match choices to rules: assume 1=profits equally, 2=no remuneration, 3=interest on advances, 4=indemnity for partnership expenses.
• Select pair matching core defaults for operations without agreement: rules 3 and 4.

Why D is correct:

• Rules 3 and 4 align with statutory defaults ensuring fair advances interest and expense indemnity, per Partnership Act provisions.

Why the others are wrong:

• A includes 1 (profits) but omits operational defaults 3/4.
• B pairs 1 (profits) with 4, ignoring 3's advance interest rule.
• C includes 2 (no remuneration) but misses key financial/operational defaults 3/4.

Final answer: D