Dissolution of a firm takes place on the happening of certain contingencies. Choose them from the following:

(A) By the death of a partner
(B) By the adjudication of a partner as an insolvent
(C) When the business of the firm becomes illegal
(D) If constituted for a fixed term, by the expiry of that term

Choose the correct answer from the options given below:

(A), (B) and (D) only

The correct answer is Option (1) → (A), (B) and (D) only 

• (A) By the death of a partner: This is a specific contingency. Unless there is a contract to the contrary, a firm is dissolved upon the death of a partner.

• (B) By the adjudication of a partner as an insolvent: This is also a contingency. If a partner is declared insolvent, the firm is dissolved as of the date of adjudication.

• (C) When the business of the firm becomes illegal: This is classified as Compulsory Dissolution. It is not considered a "contingency" (an event that might happen and is often subject to a contract), but rather a legal mandate. Once a business becomes unlawful, the law does not allow it to continue under any circumstances, making the dissolution mandatory rather than contingent

• (D) If constituted for a fixed term, by the expiry of that term: This is the third standard contingency. If the partnership was created for a specific time, it ends when that time is up.

NCERT: " 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

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, 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.