Which of the following is a case of dissolution of a partnership firm on happening of certain contingencies?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- When a partner dies.
When a partner dies is a case of dissolution of a partnership firm on happening of certain contingencies.
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.
OTHER OPTIONS
- When the firm is dissolved by agreement- This is case of dissolution by agreement.
- When a partner becomes permanently incapable of performing his duties- This is case of dissolution by court.
- When the business of the firm becomes illegal- This is case of compulsory dissolution.