Conditions that a partner may apply to the court for a dissolution of the partnership business

Under S.37 of the Partnership Act 1961, a partner may apply to the court to order a dissolution of the partnership business under different situation.

The various situations are as explained below:

1. Insanity of a partner

-S.37 (a) provides that when one partner is found to be lunatic or is shown to be of permanently unsound mind, an application may be made to the court to order a dissolution of the partnership.

-The application can be made not only by the other partner, but on behalf of the partner, who is of unsound mind, by his committee, next friends or any person having title to intervene.

2. Permanent incapacity

-S.37 (b) provides that a partner may apply to the court to order a dissolution when another partner becomes, in any other ways, permanently incapable of performing his part of the partnership agreement.

-The application in such a case can only be made by the other partner.

-Thus, if A and B are partners in a hairdressing business and A suffers from permanently paralysis of his arms, B may apply to the court for a dissolution on this ground.

3. Prejudicial Conduct

-S.37 (c) provides that a partner may apply to the court for a dissolution of the partnership when another partner has been guilty of such misconduct as, in the opinion of the court is calculated as prejudicially affect the carrying on of the business, regard being had to the nature of the business.

4. Wilful or persistent breach

-S.37 (d) provides that a partner wilfully or persistently commits breach of the partnership contract or otherwise conducts himself in matters relating to the partnership business that is not reasonably practicable for the other partner or partners to carry on the business in partnership with him, then they may apply to the court to order a dissolution.

5. Carrying on business at a loss

-S.37 (e) provides that the court may order a dissolution of the partnership if the business can only be carried on at a loss.

-It must be shown that there is no more possibility of making a profit.

-Where there is still some possibility that the business can be made profitable if more attention is given in the future, the court will not order a dissolution.