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:

"Sham had advanced a loan to the firm. He claims interest @10% per annum".

Options

• Valid

• Invalid

• Cannot be determined.

• None of above

Answer 1

Invalid

Explanation:

If a partner has advanced money to the firm in excess of his capital for business purposes, he is entitled to interest at the rate of 6% per year.