Question

Partnership is the relation between persons who have agreed to share the profits of a business carried on by all. It is the result of an agreement. Closing of business is also by an agreement. It is called Dissolution of Partnership. Explain the dissolution of partnership firm without the order of the court?

Answer 1

Dissolution of a partnership firm takes place in two ways: 

1. Without the order of the court and 

2. By the order of the court 

1. Without the order of the court: 

1. By agreement or mutual consent: A firm may be dissolved when all the partners agree to close the affairs of the firm. 

2. By insolvency of all the partners but one: If any one of the partners is adjudged as insolvent, it is necessary to dissolve the firm. 

3. When the objective becomes illegal: When the business carried on by the partnership becomes illegal, the partnership firm is automatically dissolved.

4. By notice of dissolution: In the case of partnership at will, if any partner gives in writing to close the firm, the firm will be dissolved. 

5. On certain contingencies:

• On the expiry of the period of the firm.
• On the completion of a business.
• On the death of a partner.
• On the retirement of a partner.
• On the insolvency of a partner.