A partnership firm may be dissolved in any of the following ways:

1. Dissolution by agreement or mutual consent:

A partnership firm may be dissolved with the mutual consent of all the partners in accordance with the terms of the agree­ment.

2. Dissolution by Notice:


In case of partnership-at-will, a firm may be dissolved if any partner gives a notice in writing to other partners indicating his intention to dissolve the firm.

In such a case, the dissolution takes place with effect from the date mentioned in the notice. If no date is mentioned, the firm would be dissolved with effect from the date of receipt of the notice by other partners.

When such a notice is given to other partners, it cannot be withdrawn without their consent.

3. Contingent dissolution:


A firm may be dissolved on the happening of any of the fol­lowing contingencies:

(a) On the expiry of the term, if it is for a fixed period.

(b) On the completion of the firm’s venture.

(c) On the death of a partner.


(d) On the adjudication of a partner as insolvent.

4. Compulsory dissolution:

A firm stands automatically dissolved in the following cases:

(a) When the business of the firm becomes unlawful due to the happening of an event


(b) When a partner becomes insane.

(c) When a partner becomes permanently incapable of carrying his functions as a partner.

5. Dissolution through court:

Court may order the dissolution of a firm in the following cases, when:


(a) A partner is guilty of misconduct which is likely to affect prejudicially (e.g. moral turpitude, misuse of money) the business of the firm.

(b) A partner willfully and persistently commits breach of the partnership agreement.

(c) A partner unauthorized transfers the whole of his interest or share in the firm to a third person.

(d) The business of the firm cannot be carried on except at a loss.


(e) It is just and equitable that the firm should be dissolved.