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) Change in existing profit sharing ratio among partners
(D) When some event has taken place which makes it unlawful for the partners to carry on the business of the firm in partnership.

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

(C) Change in profit sharing ratio does not lead to compulsory dissolution — it only results in reconstitution of the firm, not dissolution.

A firm is dissolved compulsorily in the following cases:

1. (A) When all the partners or all but one partner become insolvent → they are incapable of entering into a contract.

2. (B) When the business of the firm becomes illegal (e.g., due to change in law).

3. (D) When some event occurs that makes it unlawful to carry on the business in partnership (e.g., prohibition of trading in a particular product).