How should profits be divided in a partnership if no agreement exists?

In the absence of a specific partnership agreement outlining how profits should be divided, the default legal position is that profits are distributed equally among the partners. This principle is grounded in the understanding that partners share the risks and responsibilities of the business equally, regardless of their individual contributions or investment levels.

Choosing to divide profits equally encourages a collaborative approach to partnership, where each partner has a vested interest in the overall success of the business. This approach can help to foster teamwork and collective decision-making, which are vital for the long-term sustainability of the partnership.

While other methods of profit division, such as based on investment ratio, seniority, or decision-making power, might seem practical in certain contexts, they do not reflect the fundamental partnership principle of equal share unless specifically stated in an agreement. In fact, the lack of an agreement reiterates the principle that partners are co-owners of the business and thus should share equally in its profits.