Coupon Accepted Successfully!


Dissolution of a firm

In the process of testing ideas, entrepreneurs may fine-tune their ideas. This is a continuous process and may require an entrepreneur to start operations anew, with a new business model or in a new industry segment. Similarly, companies take managerial decisions to discontinue a previous business. For that purpose, simply discontinuing the operations and starting a new business is not enough. Knowing how the law allows one to terminate the business is important to prevent any legal claims from creditors, distributors, suppliers or customers from resurfacing after the business has been factually discontinued. In law, discontinuation of a partnership business is known as dissolution. Depending on the circumstances, a partnership may be dissolved in several ways, such as:
  • With the consent of all the partners or in accordance with a contract between the partners.
  • If the firm was constituted for a fixed term, by the expiry of that term;
  • If the firm was constituted for a fixed term, by the expiry of that term;
  • If the partnership was constituted to carry out one or more ventures, by the completion of such venture
  • If the partnership is at will (i.e. where no provision is made by contract between the partners for the duration of their partnership, or for the termination of their partnership) the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice.
  • By the happening of any event which makes it unlawful for the business of the firm to be carried on or for the partners to carry it on in partnership.

Test Your Skills Now!
Take a Quiz now
Reviewer Name