A partnership is a strategic alliance or relationship betweentwo or more people. Partnerships can be formal, where eachpartys roles and obligations are spelled out in a writtenagreement, or informal, where the roles and obligations areassumed or agreed to verbally
A general partnership A limited partnershipconsists of two or consists of one or more general partners and atmore people who go least one limited partner.into business together The general partnersand share in the handle the businessprofits. The general operations and share in liability. The limitedpartners are each partners contributeinvolved in the capital to the business,business operations but do not get involved inand share liability on the everyday functions and have only a limitedthe business liabilityobligations.
In law, means to end a legal entity oragreement.•When the relation between all the partners of the firmcomes 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 thepartners of a firm is called the dissolution of a firm.” Itimplies the complete break down of the relation ofpartnership between all the partners.
A partner may apply to the court for getting the firm dissolved. On getting suchapplication by any of the partner the court may proceed to order the dissolution ofthe 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 andpersistently committing a breach of the partnership agreement. 3) If a partner, other than the partner filing the suit has transferred whole of hisinterest 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 performhis duties as a partner. 6) If the court is satisfied that the business of the frim cannot be carried on except aloss.
1) If all the partners are willing and herebyagree 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.
The Dissolution of Partnership takes place under following circumstances:a) when the firm was constituted for a fixed term, on the expiry of thatterm.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.
However, there is a difference between ‘dissolution ofpartnership’ and ‘dissolution of the partnership firm’. Theformer indicates ending of agreement only to replace itwith a new one, but the latter indicates the ending ofpartnership business altogether. The following points maybe noted in comparison between the two:- Cont…
1. Only the agreement is dissolved, no physical disposaltakes place.2. The partners will continue to run the business with anew agreement.3. Limited effect on employees or debtors and creditorsof the business4. Many dissolutions of agreement can take placeduring the life of a partnership business.5. Admission, retirement and or death of a partner canresult in compulsory dissolution of existing agreement.
1. The Firm is dissolved, by selling off assets and settling liabilities.2. The partners will discontinue the business3. Since the business is closed down it affects the workers, debtors andcreditors of the firm4. Dissolution of firm can take place only once in the lifetime of apartnership business.5.None of these events can lead to a compulsory dissolution of the firm.