Question

Mohan and Sham are partners in a firm. State whether the claim is valid if the partnership agreement is silent in the following matters:

"Shyam wants interest on capital to be credited @6% per annum".

पर्याय

• Valid

• Invalid

• Cannot be determined.

• None of the above

Answer 1

Invalid

Explanation:

As a matter of right, no partner is entitled to receive interest on the amount of capital he contributed to the firm. Interest can be allowed, though, if the partners openly agree to it. If the partnership deed is silent on the subject, no interest on capital is due. If the deed allows for the payment of interest on capital but does not specify the rate, the interest will be paid at 6% per year. Furthermore, interest is only paid out of the company's profits, not if the company loses money during the period.