Which ONE of the following statements is CORRECT?a.In the absence of any provision in the contract that regulates how partners will share in the profit, a division of assets upon dissolution is made in proportion to the partners’ respective contributions to the enterprise.b.The assets of the partnership do not belong to the partners, but to the partnership.c.In the absence of any provision in a contract that regulates how partners share in the net profit or loss of the partnership, the net profit or loss is shared equally by all the partners.d.The natural consequences of a contract are those consequences which apply to a particular type of contract by choice of the parties to that contract.
Question
Which ONE of the following statements is CORRECT?a.In the absence of any provision in the contract that regulates how partners will share in the profit, a division of assets upon dissolution is made in proportion to the partners’ respective contributions to the enterprise.b.The assets of the partnership do not belong to the partners, but to the partnership.c.In the absence of any provision in a contract that regulates how partners share in the net profit or loss of the partnership, the net profit or loss is shared equally by all the partners.d.The natural consequences of a contract are those consequences which apply to a particular type of contract by choice of the parties to that contract.
Solution
To determine which statement is correct, let's analyze each option step by step:
a. In the absence of any provision in the contract that regulates how partners will share in the profit, a division of assets upon dissolution is made in proportion to the partners’ respective contributions to the enterprise.
- This statement is incorrect. The division of assets upon dissolution is not necessarily made in proportion to the partners' contributions unless specified in the partnership agreement.
b. The assets of the partnership do not belong to the partners, but to the partnership.
- This statement is correct. In a partnership, the assets are owned by the partnership entity itself, not by the individual partners.
c. In the absence of any provision in a contract that regulates how partners share in the net profit or loss of the partnership, the net profit or loss is shared equally by all the partners.
- This statement is correct. If there is no specific agreement on how to share profits or losses, they are typically shared equally among the partners.
d. The natural consequences of a contract are those consequences which apply to a particular type of contract by choice of the parties to that contract.
- This statement is incorrect. The natural consequences of a contract are those that apply by default under the law, not by the choice of the parties.
Given the analysis, the correct statement is:
c. In the absence of any provision in a contract that regulates how partners share in the net profit or loss of the partnership, the net profit or loss is shared equally by all the partners.
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