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Which of the following is NOT a case of Compulsory Dissolution? |
When all the partners or all but one partner, become insolvent, rendering them incompetent to sign a contract When the business of the firm becomes illegal When some event has taken place which makes it unlawful for the partners to carry on the business of the firm in partnership When a partner becomes permanently incapable of performing his duties as a partner |
When a partner becomes permanently incapable of performing his duties as a partner |
The correct answer is option 4- When a partner becomes permanently incapable of performing his duties as a partner When a partner becomes permanently incapable of performing his duties as a partner- It is a case of dissolution by court. Compulsory Dissolution: A firm is dissolved compulsorily in the following cases: (a) when all the partners or all but one partner, become insolvent, rendering them incompetent to sign a contract (b) when the business of the firm becomes illegal (c) when some event has taken place which makes it unlawful for the partners to carry on the business of the firm in partnership, e.g., when a partner who is a citizen of a country becomes an alien enemy because of the declaration of war with his country and India. |
