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When Do You Need Partnership Dissolution Deed?

Partnership Dissolution Deed

A Partnership Dissolution Deed is a legal document that allows dissolving a partnership. This deed is available in several formats depending upon the conditions of this dissolution.

A partnership is a business structure where two or more people come together in a formal agreement and mutually agree to carry out their business with the responsibilities and agree to share the profits and losses of the business in an agreed proportion.

The Partnership in India is governed by The Indian Partnership Act, of 1932 which states all the functions and aspects of the partnership. As given under the law, the partnership is an association of two or more persons. In the case of Partnership Dissolution Deed is formed between the parties who have agreed to split the profits generated by the business. 

The partnership deed is made between two or more parties where the rights and responsibilities of each partner are. The purpose or object of the business formed, the location of the business, the amount invested by each partner, and the proportion of profits shared. The main objective of partnership deed is to provide clear understanding between the partners. The roles and duties of the partners in concern to the projects taken by the business.

According to the Partnership Act, of 1932, this partnership can be dissolved by Partnership Dissolution Deed only in given cases where certain predefined conditions are met likewise:

1. Dissolution by agreement

2. Dissolution by Notice.

3. Dissolution by the court.

4. Compulsory Dissolution

5. Conditional dissolution


The partnership can be dissolved due to following reasons:-

1. Due to the death of the partner.

2. Change in the existing profit-sharing ratio

3. Due to the admission of a new partner

4. Due to the retirement of a partner

5. Due to the bankruptcy of a partner

6. Due to the expiry of the partnership period, if the partnership is for a specified period. 

Once the purpose of partnership dissolution is clear to the partners, they can proceed to make a Partnership Dissolution Deed.


An agreement for the dissolution of a partnership is a binding document existing between the partners which specifies the terms and conditions relating to the dissolution of the partnership. The terms vary from the formal procedure to the asset allocation process in partnership. 

In partnership, the partners make their agreement for dissolution at the beginning of the partnership for ensuring security and order. The deed of dissolution partnership continuing partners must be made in case one partner is leaving.


Partnership Dissolution Agreement generally contains the following: -

1. How and when the partnership will end

2. How to conduct business until dissolution occurs. The partnership dissolution deed is different from the agreement. 

3. Valuation of assets and liabilities of partners

4. Purchase price

5. Plan for liquidation and assets allocation

6. Mutually released liability acknowledgment

7. Confidentiality

8. Warranties.

You can download the partnership dissolution agreement pdf from the website.


Dissolution of Partnership Accounting is required when the relationship between the partners comes to an end, this termination of partnership is known as dissolution of the partnership. On the dissolution of the firm, all the books and accounts of a firm are closed, all the assets are sold, and all the liabilities are paid off. There are two scenarios in case the dissolution of partnership includes a change in the relationship of partners. The Partnership Dissolution Deed is formed before the dissolution of a firm which includes complete closure of its business. There are four modes of dissolution of partnership accounting:

1. based on mutual agreement

2. On the happening of an event

3. Compulsory dissolution

4. Dissolution by notice.


The dissolution of a Limited liability Company (LLC) can be done due to economic or legal reasons. The possible reasons are low cash flows, mismanagement, negligent accounting practices, bankruptcy, defective products, partner disagreements, and succession planning failure. dissolution of Limited liability Company (LLC) is carried out through: -

1. Voting to dissolve LLC

2. Notifying Creditors of the dissolution of the LLC. The Partnership Dissolution Deed is made when the LLC is in the process of dissolution.

3. Notification of Taxation and Licensing authorities

4. Filing of Dissolution papers

What are the provisions in the law where one partner takes over assets and liabilities?

As per the provision in the Partnership Act, of 1932 the partnership firm can be dissolved by way of dissolution by agreement. A firm may be dissolved with the consent of the partners or in accordance with a contract between the partners. The remaining partners can carry on the business on the basis of the agreement made between the partners. In such cases the assets and liabilities of the partnership may be taken over by one or more partners and the surplus will be divided as per the latest balance sheet made at the time of dissolution of the partnership. The Dissolution Deed is made to dissolve the partnership.

However, at the time of dissolution, some partners may be interested to continue the business. In such cases the partnership dissolution deed with conditions that the interested partners at the time of dissolution of partnership continuing partners of the business.