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:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A), (B) and (D) only
The Act lists separate groups of events that dissolve a firm. The contingencies are events that dissolve it unless the partners have agreed otherwise; compulsory dissolution is a separate group that applies whatever the partners agree.
(A) By the death of a partner Correct. One of the contingencies.
(B) By the adjudication of a partner as an insolvent Correct. One of the contingencies.
(C) When the business of the firm becomes illegal Incorrect. This is a case of compulsory dissolution, not a contingency.
(D) If constituted for a fixed term, by the expiry of that term Correct. One of the contingencies.
NCERT (2026-27 edition):
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