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Compulsory dissolution of a partnership firm takes place in the following circumstances.
A. Due to death of one of the partners
B. When all partner’s or all but one partner, becomes insolvent rendering them incompetent to sign a contract
C. When the business becomes illegal
D. With the consent of all the partners
E. In accordance with a contract between the partner’s
Choose the most appropriate answer from the options given below:
  • a)
    A and B only
  • b)
    B and C only
  • c)
    C and D only
  • d)
    D and E only
Correct answer is option 'B'. Can you explain this answer?
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Compulsory dissolution of a partnership firm takes place in the follow...
Compulsory dissolution takes place at the time of insolvency of all partners and illegal business
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Compulsory dissolution of a partnership firm takes place in the follow...
Compulsory Dissolution of a Partnership Firm

Explanation:

When all partner’s or all but one partner, becomes insolvent rendering them incompetent to sign a contract:
- If all partners or all but one partner become insolvent, they are considered incompetent to continue the partnership.
- In such a situation, the partnership firm is compulsorily dissolved.

When the business becomes illegal:
- If the business of the partnership firm becomes illegal due to changes in laws or regulations, the partnership must be dissolved.
- Engaging in illegal activities can lead to compulsory dissolution of the partnership.
Therefore, the most appropriate answer is B) B and C only, as these are the circumstances under which a partnership firm may be compulsorily dissolved.
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Compulsory dissolution of a partnership firm takes place in the following circumstances.A. Due to death of one of the partnersB. When all partner’s or all but one partner, becomes insolvent rendering them incompetent to sign a contractC. When the business becomes illegalD. With the consent of all the partnersE. In accordance with a contract between the partner’sChoose the most appropriate answer from the options given below:a)A and B onlyb)B and C onlyc)C and D onlyd)D and E onlyCorrect answer is option 'B'. Can you explain this answer?
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