partnership firm and

liabilities on
dissolution

By:
Haseeb Ahmed
(58214)
M.Khizer Bin Saeed
(58578)

According to Sec. 4 of Partnership Act, 1932.

Partnership is the relation between persons who
have agreed to share the profits of a business
carried on by all or any one of them acting for all

What is
In law, means to end a legal
dissolution?
entity or agreement.
When the relation between all the partners of
the firm comes to an end, this is called
dissolution of the firm.
It implies the complete break down of the
relation of partnership between all the
partners.

Mode of
dissolution
Two ways
By order of
the court

Without
intervention
of the court

y order of the court

A partner may apply to the court for getting the firm
dissolved. On getting such application by any of the partner
the court may proceed to order the dissolution of the firm in
the following circumstances:
1) If any of the partner becomes of unsound mind
2) If a partner, other than the partner filing the suit is guilty
of intentionally and persistently committing a breach of the
partnership agreement.
3) If a partner, other than the partner filing the suit has
transferred whole of his interest in the firm to a third party
without the consent of the other partners.
4) If a partner, other than the partner filing the suit is guilty
of misconduct.
5) If a partner, other than the partner filing the suit has
become disabled to perform his duties as a partner.

Without
1)
By Agreement:
intervention
of
If all the partners are willing
and hereby agree to dissolve
court
the firm.
2) Compulsory Dissolution:
Compulsory dissolution take
place under following
circumstances:
a)When all partners are
declared insolvent.
b) When all except one of the
partners are declared
insolvent.
c) When business of the firm

Without
intervention of
court
3) Contingent
Dissolution:

A firm is dissolved on
happening of
following events:
a) On the death of any partner.
b) If any partner becomes
insolvent.
c) On the expiry of the duration
of the firm.
d) On the completion of the
project

Distinction between
dissolution of
partnership and
dissolution of firm

DISSOLUTION OF
PARTNERSHIP
Dissolution of partnership is
when one partner dies, retires or
becomes insolvent but the
remaining partners continue the
business

solution of partnership fi
Dissolution of partnership firm is when the relationship
between all the partners comes to an end and the business
is closed.
In other words, dissolution of firm includes the dissolution
of partnership but dissolution of partnership may or may
not include the dissolution of the firm.

Liabilities of partners on
dissolution
Partners on Dissolution:
The partners of the dissolved
firm continue to be liable to third
parties for:
All acts done in connection with
the affairs of the firm until public
notice is given of the dissolution
Following are not liable for acts
done after the date on which he
ceases to be partner:
Partner who died
Partner who becomes insolvent
Partner who retires

Liabilities of partners on
dissolution
Continuing authority:
The authority of each partner
continue for the following:
To wind up the affairs of the
firm
To complete unfinished
transactions at the time of
the dissolution

Liabilities of partners on
dissolution
Liability to share profit:
If any partner earns any
profit from any transaction
connected with the firm,
after the dissolution, he
must share it with the other
partners and the legal
representative of any
deceased partner.