Stage: 01

Subject: Business Laws

Presentation: Partnership Dissolution

Group Members “Ignorance of the Law

Hammad Haseeb (96) excuses no one“
Kashif M.Bashir (67)
Aureb Hussain (139)
Naveed Ahmed (224) 1
 Dissolution of Firm & Partner
 Modes of Dissolution

◦ By Voluntary Acts of The Partners or Without

Interference of The Court
◦ By the Order of the Court
 Settlement Of Accounts
◦ Sale of Goodwill
◦ Sharing of Deficiency
◦ Application of Assets

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 Partnership is a relationship
between persons
 Who have agreed
 To share profit
 Of a business
 Carried on by all or any one of them acting for all

Note:
Persons who have entered into partnership are called individually ‘partners’
&
collectively a ‘firm’

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 A Firm Ceases to Exist.
 The Relationship Existing

Between all the Partners of the Firm Discontinue.

 When One or More Partners Cease to be Partners

of the Firm but Others Continue the Business in
Partnership.
 In this Case Firm is Reconstituted Without Any

Dissolution.

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Dissolution without order of Dissolution by order of
the Court (Sec. 40 to 43) the Court (Sec. 44)

By agreement By compulsory On the happening of By notice

dissolution
(Sec 40) Certain contingencies (Sec. 43)
(Sec. 41)
(Sec 42)

On Permanent Misconduct Willful or Transfer Business Court being

partner incapacity
of a partner of a partner Persistent or sale of of the firm satisfied on
Being of whole any other
affecting Breaches of interest Cannot be
Unsound of a equitable
business Agreement Carried on
partner
Mind ground
Save at a

loss

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 By Agreement
◦ With the Consent of all the Partners.
◦ Contract Between the Partners (Express Or Implied)

 By Compulsory Dissolution Or By Operation Of Law

◦ By the Adjudication of all the Partners or of all Partners But one
as Insolvent
◦ Happening of an Event which Makes it Unlawful.

 On The Happening Of Certain Contingencies

◦ On Expiry of Fixed Period for Which the Firm was Formed.
◦ On the Completion of the Project for Which the Firm was Formed.
◦ Death of a Partner.
◦ On the Insolvency of Any Partner .

 By Notice

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 Insanity of Partner
 Permanent Incapacity of the Partner
 Misconduct of a Partner
◦ Gambling by a Partner.
◦ Fraudulent Breach of Trust by a Partner.
◦ Refusal of a Partner to Attend to Business.
◦ Taking Away of Partnership Books By a Partner
 Persistent Breach of Agreement

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 Transfer of Interest
 Business of the Firm Working at a Loss
 Any Other Ground
◦ Dead Lock In The Management.
◦ Partners Not on Speaking Terms.
◦ Disappearance of the Substratum of the Business.
◦ Lack of Co-operation or Mutual Confidence.

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 Sale of Goodwill
 Sharing of Deficiency
◦ First Out of Profits.
◦ Next Out of Capital.
◦ Lastly, if Necessary, by the Partners Individually in the
Proportions in which They were Entitled to Share Profits.

 Application of Assets
◦ In Paying the Debts of the Firm to the Third Parties.
◦ In Paying to Each Partner Rateably What is Due to Him From the
Firm for Advances Distinguished From Capital.
◦ In Paying to Each Partner Rateably What is Due to Him on
Account of Capital.
◦ The Residue, If any, Shall be Divided Among The Partners in the
Proportion in Which they Were Entitled to Share Profits.

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Qu
esti
on

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