In the absence of an agreement to the contrary, the partners _________________.

Are entitled for 6% interest on loans to the firm, only when there is profit

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Are entitled for 6% interest on loans to the firm, whether there is profit or not

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Are not entitled for any interest on loans to the firm

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Are entitled for 9% interest on loans, only when there are profits

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Solution

The correct option is B Are entitled for 6% interest on loans to the firm, whether there is profit or not
As per the Partnership Act, 1932, the rule which is applicable with respect to interest on loan by partner, in the absence of an agreement, is that 'if a partner has given a loan to the firm besides his share of capital, he will be allowed 6% interest on such loan.'

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