Which of the following is false for dissolution of partnership firm?

A firm is compulsorily dissolved when a partner decide to retire.

The correct answer is option 3- A firm is compulsorily dissolved when a partner decide to retire.

A firm is compulsorily dissolved when a partner decide to retire is false for dissolution of partnership firm.

* Dissolution of a partnership is different for dissolution of a firm.- True. Dissolution of partnership means reconstitution of partnership firm whereas dissolution of firm means end of the firm.

* A partnership is dissolved when there is death of a partner- True. This is case of dissolution of firm on happening of certain contingency.

* A firm is compulsorily dissolved when a partner decide to retire.- False. A firm is not dissolved on the retirement of a partner. It is reconstituted.

* A firm is dissolved when all partners give consent to it.- True. This is case of dissolution of firm by agreement between partners.

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 or (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, 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.

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;
(c) when a partner is guilty of misconduct which is likely to adversely affect the business of the firm;
(d) when a partner persistently commits breach of partnership agreement;
(e) when a partner has transferred the whole of his interest in the firm to a third party;
(f) when the business of the firm cannot be carried on except at a loss; or
(g) when, on any ground, the court regards dissolution to be just and equitable.