Which statements are true about the dissolution of a partnership?
(A) Dissolution of a partnership is different from dissolution of a firm.
(B) A partnership is dissolved when there is a death of a partner.
(C) A firm is compulsorily dissolved when a partner decide to retire.
(D) Dissolution of partnership can not take place without intervention of the court.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A) and (B) only
Dissolution of a partnership only changes the relationship among the partners, and the firm may carry on; dissolution of the firm ends the relationship among all the partners and closes the business.
(A) Dissolution of a partnership is different from dissolution of a firm. Correct. A partnership is dissolved whenever the partners’ agreement changes, but the firm is dissolved only when the relationship among all the partners ends.
(B) A partnership is dissolved when there is a death of a partner. Correct. Death ends the existing agreement; the remaining partners may continue the firm under a new one.
(C) A firm is compulsorily dissolved when a partner decide to retire. Incorrect. Retirement reconstitutes the partnership; compulsory dissolution happens only on insolvency of all (or all but one) partners or when the business becomes unlawful.
(D) Dissolution of partnership can not take place without intervention of the court. Incorrect. A partnership is dissolved without any court on admission, retirement, death or a change in the ratio; the court is needed only in the cases the Act lists.
NCERT (2026-27 edition):
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