Identify the reason that will lead to dissolution of partnership.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → When there is change in existing profit sharing ratio among partners
Dissolution of partnership is a change in the relationship among the partners while the firm carries on its business. A change in the existing profit sharing ratio is such a change: the old agreement ends, a new one begins and the firm continues.
Why the other options are incorrect
Option (1) When the business of the firm becomes illegal — Incorrect. This is a case of compulsory dissolution of the firm itself; the business cannot go on.
Option (2) When a partner becomes insane — Incorrect. This is a ground on which the court may order dissolution of the firm.
Option (3) When a partner persistently commits breach of partnership agreement — Incorrect. This too is a ground for dissolution of the firm by the court.
NCERT (2026-27 edition):
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