Modes of Dissolution of the Firm
By mutual agreement: A firm may be dissolved when all the partners
agree for its dissolution.
Compulsory dissolution: A firm may be compulsorily dissolved:
1. When all the partners or
all the partners except one become insolvent.
2. When business of the firm
becomes unlawful.
By notice: In case partnership is at will, the firm may be
dissolved by any partner giving notice in writing to all the other partners of
his intention to dissolve the firm.
On happening of an event: A firm may be dissolved in any of the
following events, if the partnership deed so provides:
2. On completion of the
venture
3. On death of a partner
4. On adjudication of a
partner as insolvent
Dissolution by Court: Court may pass order for the dissolution of
the firm when:
1. A partner becomes a person
of unsound mind;
2. A partner becomes
permanently incapable of performing his duties as a partner;
3. A partner is found guilty
of misconduct, which is likely to adversely affect the business of the firm;
4. Partnership agreement is
breached persistently by a partner or partners;
5. Court finds dissolution of
the firm justified;
6. When the business of the
firm cannot be carried on except at a loss.
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