CIRCUMSTANCES LEADING TO DISSOLUTION OF PARTNERSHIP

 CIRCUMSTANCES LEADING TO DISSOLUTION OF PARTNERSHIP

A partnership is dissolved or comes to an end on:

(a) the expiry of the term for which it was formed or the completion of the venture for which it was entered into;

(b) death of a partner;

(c) insolvency of a partner.

However, the partners or remaining partners (in case of deathor insolvency) may continue to do the business. In such case there will be a new partnership but the firm will continue. When the business comes to an end then only it will be said that the firm has been dissolved.

A firm stands dissolved in the following cases:

(i) The partners agree that the firm should be dissolved;

(ii) All partners except one become insolvent;

(iii) The business becomes illegal;

(iv) In case of partnership at will, a partner gives notice of dissolution; and

(v) The court orders dissolution.

The court has the option to order dissolution of a firm in the following circumstances :
(a) Where a partner has become of unsound mind;

(b) Where a partner suffers from permanent incapacity;

(c) Where a partner is guilty of misconduct of the business;

(d) Where a partner persistently disregards the partnership agreement;

(e) Where a partner transfers his interest or share to a third party;

(f) Where the business cannot be carried on except at a loss; and

(g) Where it appears to be just and equitable.