Art and Alma made capital contributions of 60% and 40% respectively to their newly formed partnership,AA & Associates.They did not have a written partnership agreement.At the end of the first year,the partnership made a profit of which Alma now claims half.However,Art maintains he should receive 60%.Who is correct?

Question

Quizplus · Accepted Answer

The Uniform Partnership Act (UPA) provides that profits and losses are split equally among partners unless otherwise agreed upon in a partnership agreement. Since there was no written partnership agreement in this case, the default rule applies, and profits should be split equally between Art and Alma, regardless of their capital contributions. Therefore, Alma is correct in claiming half of the profits.

Art and Alma Made Capital Contributions of 60% and 40