Partnership Profit Distribution

5 Questions

Match the partner's share in profits without agreement with the correct statement:

Industrial Partner = Shall receive such contribution share as may be just and equitable under the circumstances Capitalist Partner = In proportion to his agreement

Match the obligations of industrial partners with the correct statement:

Shall not be liable for losses in absence of agreement as to profits and losses = Exception: in the absence of agreement, the industrial partner shall not be liable for losses Receives contribution share in proportion to circumstances = Shares in the profits according to agreement

Match the obligations of capitalist partners with the correct statement:

Shares in the profits according to agreement = Capitalist Partner Not liable for losses without agreement as to profits and losses = Exception: in the absence of agreement, the industrial partner shall not be liable for losses

Match the distribution of losses in partnership with the correct statement:

Industrial partner's liability for losses when there is no agreement = General Rule: the agreement as to losses; if any

Match the distribution of profits in partnership with the correct statement:

Shares in the profits according to agreement = General Rule: the agreement as to profits Shares in the profits according to circumstances = Shall receive such contribution share as may be just and equitable under the circumstances

Study Notes

Rules for Distribution of Profits and Losses of a Partnership

Distribution of profits is done in conformity with the agreement.
If there is no agreement, capitalist partners receive profits in proportion to their contribution to the common fund.
If there is no agreement, industrial partners receive profits in a just and equitable manner under the circumstances.

Distribution of Losses

Distribution of losses is done in conformity with the agreement.
If the only agreement pertains to the share of each partner in the profits, the share of each in the losses shall be in the same proportion.
If there is no agreement, capitalist partners bear losses in proportion to their contribution to the common fund.
Industrial partners are not liable for losses.

Management of the Partnership

Either one, some, or all of the partners designated as managing partner/s can manage the partnership, either in the articles of partnership or after the contract of partnership had already been constituted.
If there is no agreement, management is vested in all of the partners.

Property Rights of a Partner

A partner has rights in specific partnership property.
A partner has an interest in the partnership.
A partner has the right to participate in the management.

Capitalist Partner vs. Industrial Partner

A capitalist partner shares profits according to the agreement, and if there is no agreement, in proportion to their contribution.
A capitalist partner bears losses according to the agreement, and if there is no agreement, in proportion to their contribution.
An industrial partner shares profits in a just and equitable manner under the circumstances.
An industrial partner is not liable for losses.