Default Partnership Rules Without Agreement

Steps:

• Recall that without a partnership agreement, the Partnership Act governs defaults like equal profit sharing and no interest on capital.
• Evaluate option A: No fixed 5% interest on drawings is specified by law.
• Evaluate option B: Salaries for partners require explicit agreement; none is allowed by default.
• Evaluate option C: Law confirms no interest on capital unless agreed upon.
• Evaluate option D: Profits and losses share equally, not by contribution ratio.

Why C is correct:

• Under Section 13 of the Indian Partnership Act 1932, partners receive no interest on capital contributions in the absence of an agreement.

Why the others are wrong:

• A: No statutory rate of 5% on drawings; interest on drawings is not mandated.
• B: All partners may receive salaries only if stipulated; default prohibits them.
• D: Section 13(b) mandates equal sharing of profits and losses, regardless of contributions.

Final answer: C