Question

In the absence of a partnership deed, what are the rules to be followed if there are disputes among partners?

A. Follow the rule of seniority
B. Majority decision prevails
C. Equal distribution of profits
D. Liquidate the partnership

Answer 1

In the absence of a partnership deed, disputes among partners are usually addressed by equally distributing profits and making decisions through majority vote. There is no rule of seniority and disputes do not necessarily lead to the liquidation of the partnership. The correct answer is option B. and C.

Step-by-step explanation:

In the absence of a partnership deed, disputes among partners are usually resolved by following certain standard rules that are typically recognized by law. If such a situation arises, the following rules are commonly applied:

• Equal distribution of profits: Without a deed, profits are usually shared equally among all partners regardless of their contribution to the capital.

• Majority decision: Any decision within the partnership is usually decided by a majority vote of the partners. In case of an equal vote, the decision is postponed or further discussion is needed to reach a consensus.

• No rule of seniority: Seniority does not have a bearing on decision-making in a partnership, unless specified in a deed.

• No automatic liquidation: If disputes occur, the partnership is not automatically dissolved or liquidated. Usually, partners seek to resolve disputes or may opt for dissolution following legal procedures.