Question

X, Y and Z are partners. The partnership agreement is silent. State whether the firm is dissolved in each of the following alternative cases:
Case (a): If X, Y, Z are declared as insolvent,
Case (b): If X and Y are declared as insolvent,
Case(c): If only X is declared as insolvent.

Answer 1

Solution:
Cases (a) and (b)
Section to which the given problem relates: Section 41.
Decision and Reason: Cases (a) and (b) Yes The firm is compulsorily dissolvd because Section 41 specifically provides for the same. The firm does not exist at all because there must be at least two persons to constitute a firm.
Case (c): Section to which the given problem relates: Section 42.
Decision and Reason:
If partnership agreement is silent, a firm is dissolved by the adjudication of a partner as an insolvent.