Introduction

A partnership is a sort of business where two or more than two people comes into a
formal agreement to run an organization and agrees to be the co-owners and assents
to distribute duties and obligations and share the income, profit or losses that the
business produces as per their ratio. The provisions under “The Indian Partnership
Act 1932” regulate all the aspects and elements of the partnership in India. This
particular law clarifies that organization is a relationship between at least two people
or parties who have acknowledged sharing the benefits created from the business
under the management of the members or sake of different individuals. This
partnership agreement consists of each and every member’s rights and
responsibilities who agree to be the co-owners or who has established the business.
This agreement contains the objective and the very reason for which this association
has come into existence; it also highlights each and every partner’s investment
amount and their profit sharing ratio which is an essential term.
Dissolution of Firms
When the relation between all the partners of the firm comes to an end, this is called
dissolution of the firm. Section 39 of the Indian Partnership Act, provides that “the
dissolution of the partnership between all the partners of a firm is called the
dissolution of a firm.” It implies the complete break down of the relation of
partnership between all the partners.
Dissolution of partnership is different from the dissolution of firm.
Dissolution of a partnership firm merely involves a change in the relation of partners;
whereas the dissolution of firm amounts to a complete closure of the business. When
any of the partners dies, retires or become insolvent but if the remaining partners
still agree to continue the business of the partnership firm, then it is dissolution of
partnership not the dissolution of firm. Dissolution of partnership changes the mutual
relations of the partners. But in case of dissolution of firm, all the relations and the
business of the firm comes to an end. On dissolution of the firm, the business of the
firm ceases to exist since its affairs are would up by selling the assets and by paying
the liabilities and discharging the claims of the partners. The dissolution of
partnership among all partners of a firm is called dissolution of the firm.
Partnership Dissolution

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