Q: I formed a partnership with a classmate to sell snacks during the school year. I would like to divide the profits now, while my friend wants to reinvest them and expand the “business” until the end of the school year. Who is right?
A: In a business partnership with a defined time frame, just as each partner cannot unilaterally disband the partnership prematurely, so, too, he cannot unilaterally demand to divide the profits prematurely. This is because the partners committed financially to each other, and the profits may be needed to offset future losses. Furthermore, greater assets can allow greater business profits (C.M. 176:15; Sma 176:45; Pischei Choshen, Shutfim 3:3).
If the partnership had no time frame, each partner can disband the partnership at any point. Nonetheless, as long as the partnership remains intact, the profits should remain reinvested, unless the clear understanding was that profits would be distributed on a regular basis.
This, of course, is in the absence of an agreed-upon arrangement beforehand or a clear commercial practice.