In the absence of any agreement, partners are entitled to get a fair distribution of assets and liabilities. This means that if there is no partnership agreement, the law will dictate how the assets and liabilities of the business are divided up among the partners.
Under the Uniform Partnership Act, which is a set of laws that governs partnerships in the United States, partners are entitled to an equal share of the profits and losses of the business. This means that if there are two partners, each partner is entitled to 50% of the profits and losses.
However, in the absence of any agreement, partners are not entitled to an equal share of the assets of the business. Instead, the assets are divided up according to each partner`s contribution to the business. This means that if one partner contributed more money to the business than the other partner, that partner will be entitled to a larger share of the assets.
In addition, in the absence of any agreement, partners are also entitled to a fair share of the liabilities of the business. This means that if the business owes money to creditors, each partner will be responsible for paying a portion of the debt based on their share of the business.
It is important for partners to have a partnership agreement in place to avoid any confusion or disputes in the future. A partnership agreement can outline how the profits and losses of the business will be divided, how the assets and liabilities of the business will be distributed, and how any disputes will be resolved.
In conclusion, partners who do not have a partnership agreement in place are entitled to a fair distribution of assets and liabilities. However, it is recommended that partners have a partnership agreement in place to ensure that everyone is on the same page and to avoid any future conflicts. A partnership agreement can help to establish clear guidelines and expectations for the business and its partners.