A Partnership is astrategic alliancebetween two or morepeople.1. Formal- each party’sroles and obligationsare spelled out in awritten agreement.2. Informal- roles andobligations areassumed or agreed onverbally .The term“Dissolution” standsfor discontinuation ortermination of thefirm.When the relationbetween all thepartners of the formcomes to an end, thisis known asdissolution of the firm.
• It means termination of the old partnershipagreement and a reconstruction of the firm due toadmission, retirement or death of a partner.• Change in relation of partners.• may or may not result in the closing down of thebusiness - remaining partners may agree to carryon the business under a new agreement.
The partnership is deemed to have beendissolved in any of the following cases:• change in profit sharing ratio of existing partners• admission of a new partner• retirement of a partner• expulsion of a partner• death of a partner• insolvency of a partner• expiry of the period of partnership
• It means that a firm closes down its businessand comes to an end.• the assets of the firm are sold and liabilitiesare paid off .• out of the remaining amount, the accounts ofthe partners are settled.• The partnership is automatically dissolved.
A partnership firm can be dissolved in any ofthe following circumstances:• all partners agree to dissolve the firm.• business becomes unlawful or illegal.• all partners except one become insolvent.• court orders the dissolution of the firm.• any partner gives notice of dissolution.• a Partner is involved in continuous disregard ofPartnership Deed
By order ofthe CourtWithout theorder of theCourt
By MutualAgreementCompulsoryDissolutionByNoticeOn Happeningof an Event
• By Mutual Agreement All partners agree for its dissolution
•Compulsory Dissolution -All partners except one become insolvent- business of the firm becomes unlawful
•On Happening of an Event - expiry of the term- completion of the venture- death of a partner- insolvency of a partner
•By Notice any partner giving notice in writing to all the otherpartners of his intention to dissolve the firm.
Insanity of apartnerPermanentIncapacityTransfer ofinterestPersistentbreach ofcontractJust andEquitablegroundMisconductPerpetualLossesOn the following grounds, a court may order for dissolution offirm :
• Partners right to enforce winding up• Continuing authority of the partners of a dissolved firm• Settlement of accounts in the case of dissolution and winding up thepartnership firm.• Giving notice