Rules Applicable in the Absence of a Partnership Deed

Not every partnership has a written deed, and even a written deed may be silent on a particular point. For exactly such situations, the Indian Partnership Act, 1932 lays down a set of default rules — mainly under Section 13 — that automatically apply UNLESS the partners have agreed otherwise. Getting these rules right matters directly to this subject, because a problem that does not mention a partnership deed (or is silent on a specific item) must be solved using exactly these statutory defaults, not any figure a student may simply assume is 'usual'.

In the absence of a Partnership Deed (or where the deed is silent on a point):

1. Profit-sharing ratio — partners share profits and losses EQUALLY, regardless of how much capital each has contributed or how much work each actually does in the firm [Section 13(b)].
2. Interest on capital — NO partner is entitled to interest on the capital contributed [Section 13(c)]. This is a point students very often get wrong by assuming some standard rate (5% or 6%) applies by default — the correct default is that NO interest at all is allowed.
3. Interest on drawings — no interest is chargeable on a partner's drawings.
4. Remuneration to partners — no partner is entitled to any salary, commission, or other remuneration for taking part in the conduct of the firm's business [Section 13(a)]. This applies even to a partner who does most of the day-to-day work — remuneration is payable only if the deed specifically provides for it.
5. Interest on a partner's loan — if a partner, apart from their share of capital, has advanced any further sum to the firm as a LOAN, that partner IS entitled to interest on it, at 6% per annum [Section 13(d)]. This is the one item on which the Act does prescribe a positive rate by default, and it applies only to a genuine loan over and above capital, never to the capital balance itself.
6. Indemnity to a partner — the firm must indemnify a partner for payments made and liabilities incurred by that partner in the ordinary and proper conduct of the firm's business, or in an emergency to protect the firm from loss, provided the partner acted as a reasonably prudent person would have in their own case [Section 13(e)].
7. A partner's liability to the firm — a partner must indemnify the firm for any loss caused to it by that partner's own wilful neglect or fraud in the conduct of the firm's business [Section 13(f)].