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P1 C7 DISSOLUTION OF PARTNERSHIP — Elements of Account STD 12 Commerce — Question

Gujarat BoardEnglish MediumSTD 12 CommerceElements of AccountP1 C7 DISSOLUTION OF PARTNERSHIP3 Marks
Question
Explain methods of dissolution without the interference of court.
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Answer

There are two method for dissolution of partnership firm : $(I)$ Normal Dissolution $(II)$ Dissolution by the court.
$(I)$ Normal Dissolution/Dissolution without interference of Court : It is as under :
$(i)$ By agreement: When all partners agree to dissolve the firm, partnership firm can be dissolved at any point of time. It is voluntary dissolution.
$(ii)$ Dissolution on happenings of certain contingencies :
$(a)$ If arrangement for a fixed term, by the expiry of that term.
$(b)$ If arrangement to carry out specific aim, by the completion thereof.
$(iii)$ Dissolution by notice : Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm.
$(iv)$ Dissolution as per act : In the following conditions compulsory dissolution is taken place by the act.
$(a)$ When all the partners of the firm become insolvent, or except one, all partners become insolvent.
$(b)$ When business of firm becomes illegal, this also brings dissolution of a partnership firm. E.g. If a firm doing business of Tobacco and government put restriction through law on this business, then this business automatically become illegal and dissolve.
$(c)$ When any partner becomes mental weak or due to his death. Partnership is going to end and firm dissolve.
$(v)$ Dissolution as per contract: Dissolution of a partnership firm can be done on the basis of predetermined contract between the partners.

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