Which of the following is the mode of dissolution of a partnership firm?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- All of these.
Dissolution of a firm takes place in any of the following ways:
1. Dissolution by Agreement: A firm is dissolved :
- (a) with the consent of all the partners
- (b) in accordance with a contract between the partners.
2. 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; or
- (c) when some event has taken place which makes it unlawful for the partners to carry on the business of the firm in partnership
3. On the happening of certain contingencies: Subject to contract between the partners, a firm is dissolved :
- (a) if constituted for a fixed term, by the expiry of that term;
- (b) if constituted to carry out one or more ventures, by the completion thereof;
- (c) by the death of a partner;
- (d) by the adjudication of a partner as an insolvent.
4. Dissolution by Notice: In case of partnership at will, the firm may be dissolved if any one of the partners gives a notice in writing to the other partners, signifying his intention of seeking dissolution of the firm.
5. Dissolution by Court: At the suit of a partner, the court may order a partnership firm to be dissolved on any of the following grounds:
- (a) when a partner becomes insane;
- (b) when a partner becomes permanently incapable of performing his duties as a partner.