Different modes of dissolution of a partnership firm are the following
(i) Dissolution by Agreement (section 40)
A firm is formed by an agreement between the partners. So it may be dissolved by the partnership agreement or with the consent of all the partners.
(ii) Compulsory Dissolution (Section 41)
A firm is dissolved compulsorily in the following cases
1. When all the partners or all except one become insane or insolvent.
2. When the business of the firm becomes illegal.
3. When all the partners except one retire.
4. When all the partners or all except one die.
- When the period of partnership expires,
- When the venture for which the partnership was formed becomes complete.
(iii) Dissolution on the happening of contingencies(42)
A firm may be dissolved on the happening of the following contingencies or events
1. On the death of a partner
2. On the insolvency of a partner
(iv) Dissolution by Notice (Sec 43)
If the partnership is a partnership at will, it can be dissolved by a partner by giving a notice to the other partners showing his will to dissolve the firm.
(v) Dissolution by Court (Sec 44)
A Court may issue an order to a partnership firm to dissolve the same on the suit of a partner in the following circumstances
1. If a partner becomes insane
2. If a partner becomes in capable of performing his duties
3. If a partner is found guilty of misconduct affecting the firm
4. If a partner intentionally and continuously commits breach of contract
5. If a partner transfers his interest in the firm to an outsider.
6. If the business of the firm cannot be carried on except at a loss
7. lf the court thinks it just and equitable to dissolve the firm
