Able, Bray, and Carry form a general partnership to produce and sell widgets. Able is a CPA, Bray has an MBA, and Carry has few skills. In their partnership agreement, they decide to split any profits they have in the following respective proportions: 45%, 45%, and 10%. They fail to agree on how they will share any losses. At the end of the first year of operations they have a large loss. Assuming each of the partners has sufficient assets to cover the loss of their partnership, how will they split the losses between Able, Bray, and Carry, respectively?
- 45%, 45%, and 10%.
- Equally.
- It cannot be determined yet until they agree upon a loss-sharing plan.
- A court of law will have to decide upon the way they will each share the loss.