Circumstances under which a firm is dissolved

Kane Dane

The four circumstances under which a firm is dissolved are follows:

By Agreement: A firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners.

Dissolution by Notice: In case of partnership at will, the firm may be dissolved by any partner giving notice in writing to all other partners of his intention to dissolve the firm.

Compulsory Dissolution: A firm is compulsory dissolved if :

All the partners except one are insolvent or all,partners are insolvent.
The business of partnership has become illegal by happening of an event.

Dissolution by Court: The court may at the move of a partner dissolve a firm in any one of the following ways:

When a partner has become of unsound mind.
When a partner has become permanently incapable of performing his duties as a partner.
When a partner is guilty of misconduct which is likely to affect prejudicial the business of the firm.
When a partner willfully and persistently commits breach of agreement regarding management of the affairs of the firm.
When a partner has transferred the whole of his interest to a third party.
When the business of the firm cannot be carried on except at a loss.
Any other ground which render it just and equitable that the firm should be dissolved.

Subject to contract between the partners a firm is dissolved