DISSOLUTION OF

PARTNERSHIPFIRM

INTRODUCTIONA Partnership is a strategic alliance between two or more people.

1. Formal- each party’s roles and obligations are spelled out in a written agreement.

2. Informal- roles and obligations are assumed or agreed on verbally .

The term “Dissolution” stands for discontinuation or termination of the firm. When the relation between all the partners of the form comes to an end, this is known as dissolution of the firm.

Dissolution of Partnership

• It means termination of the old partnership agreement and a reconstruction of the firm due to admission, retirement or death of a partner.

• Change in relation of partners.

• may or may not result in the closing down of the business - remaining partners may agree to carry on the business under a new agreement.

CAUSESThe partnership is deemed to have been dissolved in any of the following cases:• change in profit sharing ratio of existing

partners• admission of a new partner• retirement of a partner• expulsion of a partner• death of a partner

• insolvency of a partner• expiry of the period of partnership

Dissolution of Partnership Firm

• It means that a firm closes down its business and comes to an end.

• the assets of the firm are sold and liabilities are paid off .

• out of the remaining amount, the accounts of the partners are settled.

• The partnership is automatically dissolved.

CAUSES

A partnership firm can be dissolved in any of the following circumstances:• all partners agree to dissolve the firm.

• business becomes unlawful or illegal.• all partners except one become insolvent.• court orders the dissolution of the firm.• any partner gives notice of dissolution.• a Partner is involved in continuous disregard of Partnership Deed

Modes of Dissolution

By order of the Court

Without the order

of the Court

Without the order of Court

By Mutual Agreemen

t

Compulsory

Dissolution

By Notice

On Happening of

an Event

• By Mutual Agreement

All partners agree for its dissolution

•Compulsory Dissolution

-All partners except one become insolvent- business of the firm becomes unlawful

•On Happening of an Event

- expiry of the term- completion of the venture- death of a partner- insolvency of a partner

•By Notice

any partner giving notice in writing to all the other partners of his intention to dissolve the firm.

By the Order Of Court

Insanity of a partner

Permanent

Incapacity

Transfer of interest

Persistent breach

of contract

Just and

Equitable

ground

Misconduct

PerpetualLosses

On the following grounds, a court may order for dissolution of firm :

Effects of Dissolution of Partnership Firm

• Partners right to enforce winding up

• Continuing authority of the partners of a dissolved firm

• Settlement of accounts in the case of dissolution and

winding up the partnership firm.

• Giving notice