The partners agree in the deed that A will not bear losses. How will this clause be treated in case of loss?

Correct answer: A may be exempted from loss according to the deed

The governing concept is freedom of agreement in determining partners’ mutual rights and duties, subject to applicable partnership law. If the deed clearly and validly states that A will not share losses, A may be exempted according to that clause. The loss would then be allocated among the other partners in the manner stated in the deed or, where necessary, under the applicable default rule. An equal loss cannot automatically be imposed on A when a valid contrary term exists. The whole loss also cannot be charged to A merely because A is a partner, and a loss is never converted into sales. Therefore option A is the correct treatment.