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Types of business organisation




               In addition, under s.35 Partnership Act 1890 the court can bring a partnership to an
               end in the following situations:

                    Partner has mental disorder or permanent incapacity.


                    Partner engages in activity prejudicial to the business.

                    Partner persistently breaches the partnership agreement.

                    Business can only be carried on at a loss.

                    It is just and equitable to do so.


               Distribution of assets


               In the event of dissolution the assets of the partnership will be used to pay off the
               debts of the partnership. As a partnership does not have the advantage of limited
               liability status, if the proceeds on the sale of the assets does not cover the debts then
               the partners' personal wealth will be called upon to make up the shortfall.

               The proceeds from the sale of the assets will be applied in the following order:

               i     paying debts to outsiders:


               ii    paying the partners any advance they made to the firm beyond their capital
                     contribution i.e. a loan

               iii   paying the capital contribution of the partners.


               If there is a residue remaining this will be divided between the partners in the same
               proportion in which they share the profits of the partnership.


               In the event that the assets are insufficient to meet the debts to outsiders then profits
               held back from previous years or partners' capital will be used to make good the
               shortfall. If these are also insufficient then the partners will individually contribute in
               the proportion to which they shared in the profits.






















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