Rajiv and Ramesh entered into a verbal agreement to form a firm. They agreed to share its profits. Their business was running smoothly. One day a dispute arose between Rajiv and Ramesh regarding the profit-sharing ratio. Rajiv decided to move the court and enforce his rights against the firm and Ramesh. Will Rajiv succeed? Give reasons in support of your answer.

Question

Accepted Answer

No, Rajiv will not succeed. Though oral agreements are acceptable in partnership, when a dispute arises regarding the profit-sharing ratio, it becomes difficult to enforce rights without a written agreement. A written Partnership Deed clearly stating the terms is advisable to avoid such disputes.