1.1 INTRODUCTION
The main purpose of this topic is to inculcate an in-depth understanding of the adjustments and
reorganizations that may be undertaken in the process of running a business as a partnership.
1.2 LECTURE OBJECTIVES
By the end of this lecture, you should be able to:
Identify the reasons as to why a partnership may be dissolved
Account for the dissolution of a partnership
Identify the reasons as to why a partnership may be converted into a limited liability company
Account for the conversion process
Account for the process of amalgamating two or more partnerships
1.3: MODES OF DISSOLUTION
Section 36 to 39 of the partnership Act underlines the various circumstances under which a
partnership may be dissolved. These include:
i. Dissolution by agreement- This is where all the partners duly agree to terminate the
partnership.
ii. Dissolution by illegality- This is where the happening of an event makes it unlawful
for the business of a partnership to be carried on.
iii. Dissolution on happening of some events- A partnership is dissolved in any of the
following ways unless there is a contract between the partners to the contrary;
By the expiry of a specific period
By the bankruptcy of a partner
By the death of a partner
By the completion of the adventure or undertaking
By any partner giving notice to the other partners to dissolve the partnership
iv. Dissolution by the court- A court may order dissolution of partnership on the
application of a partner in any of the following;
When a partner becomes of unsound mind
When the business can only be carried on at a loss
When a partner is guilty of misconduct affecting the business of the firm
When a partner suffers from permanent incapacitation and cannot perform his/her duties as a
partner
When a partner commits willful or persistent breaches of agreement
