When the partnership deed is silent on various provisions, the Indian Partnership Act, 1932 provides default rules that govern the partnership.
According to Section 13 of the Indian Partnership Act, 1932, when the deed is silent, interest on loans advanced by partners to the firm is allowed at 6% per annum.
This is different from interest on capital, which is not allowed when the deed is silent.
Key Point: Loan advanced by a partner is different from capital contributed by a partner. A loan is a separate amount given by the partner to the firm beyond their capital contribution, and the Act recognizes this by allowing interest on such loans even when the deed is silent.
Other default provisions when deed is silent:
- Partners share profits/losses equally
- No interest on capital
- No interest charged on drawings
- No partner salary or commission
Correct Answer: Option 2 (6%)