3. A partnership is a strategic alliance or relationship between
two or more people. Partnerships can be formal, where each
party's roles and obligations are spelled out in a written
agreement, or informal, where the roles and obligations are
assumed or agreed to verbally
4. A general partnership A limited partnership
consists of two or consists of one or more
general partners and at
more people who go least one limited partner.
into business together The general partners
and share in the handle the business
profits. The general operations and share in
liability. The limited
partners are each partners contribute
involved in the capital to the business,
business operations but do not get involved in
and share liability on the everyday functions
and have only a limited
the business liability
obligations.
5. In law, means to end a legal entity or
agreement.
•When the relation between all the partners of the firm
comes to an end, this is called dissolution of the firm.
Section 39 of the Indian Partnership Act, provides that
“the dissolution of the partnership between all the
partners of a firm is called the dissolution of a firm.” It
implies the complete break down of the relation of
partnership between all the partners.
7. A partner may apply to the court for getting the firm dissolved. On getting such
application by any of the partner the court may proceed to order the dissolution of
the firm in the following circumstances:
1) If any of the partner becomes of unsound mind
2) If a partner, other than the partner filing the suit is guilty of intentionally and
persistently committing a breach of the partnership agreement.
3) If a partner, other than the partner filing the suit has transferred whole of his
interest in the firm to a third party without the consent of the other partners.
4) If a partner, other than the partner filing the suit is guilty iof misconduct.
5) If a partner, other than the partner filing the suit has become disabled to perform
his duties as a partner.
6) If the court is satisfied that the business of the frim cannot be carried on except a
loss.
8. 1) If all the partners are willing and hereby
agree to dissolve the firm.
2) In the following circumstances:
a) On the death of any partner.
b) If any partner becomes insolvent.
c) On the expiry of the duration of the firm.
d) On the completion of the venture.
9. The Dissolution of Partnership
takes place under following
circumstances:
a) when the firm was constituted for a fixed term, on the expiry of that
term.
b) on the completion of particular venture,if constituted for a purpose.
c) on the death of a partner.
d) on the insolvency of a partner.
e) on the retirement of a partner.
10. However, there is a difference between ‘dissolution of
partnership’ and ‘dissolution of the partnership firm’. The
former indicates ending of agreement only to replace it
with a new one, but the latter indicates the ending of
partnership business altogether. The following points may
be noted in comparison between the two:-
Cont…
11. 1. Only the agreement is dissolved, no physical disposal
takes place.
2. The partners will continue to run the business with a
new agreement.
3. Limited effect on employees or debtors and creditors
of the business
4. Many dissolutions of agreement can take place
during the life of a partnership business.
5. Admission, retirement and or death of a partner can
result in compulsory dissolution of existing agreement.
12. 1. The Firm is dissolved, by selling off assets and settling liabilities.
2. The partners will discontinue the business
3. Since the business is closed down it affects the workers, debtors and
creditors of the firm
4. Dissolution of firm can take place only once in the lifetime of a
partnership business.
5.None of these events can lead to a compulsory dissolution of the firm.
