Upon the dissolution of a partnership, the partnership act provides that the assets of the firm, including the sums contributed by the partners to make up losses or deficiencies of capital, must be applied in the following manner and order:
- In paying the debts and liabilities of the firm to persons who are not partners therein.
- In paying to each partner rateable what is due from the firm to him for advances as distinguished from capital.
- In paying to each partner the amount due to him in respect of his capital and current account balances.
In the absence of agreement to the contrary, the partnership act provides that the following shall be grounds for the dissolution of a partnership:
- The expiration of the term for which the partnership was entered into, if a fixed term was agreed upon.
- The termination of the advantage or undertaking, when a single adventure or undertaking was the purpose of the partnership.
- When one partner gives notice to the others of his intention to dissolve the firm.
- The death of a partner.
- The bankruptcy of a partner.
- The happening of an event which causes the partnership to become illegal.
- When a partner allows his share of the partnership to be charged for his separate debt.