Question

Assertion (A): Dissolution of the firm necessarily brings dissolution of the partnership.

Reason (R): Dissolution of partnership would not necessarily involve dissolution of firm.

In the context of the above two statements, which of the following is correct?

Options

• Assertion (A) is correct, but Reason (R) is wrong.

• Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A)

• Both Assertion (A) and Reason (R) are incorrect.

• Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

Answer 1

Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A)

Explanation:

Both statements are legally correct. Dissolution of a firm means the complete closure of the business, which automatically ends the partnership among all members. On the other hand, dissolution of a partnership only means changing the agreement (due to admission, retirement, or death) while the business itself continues to run. However, the reason is not the correct explanation because it simply states an independent legal fact rather than explaining why a firm’s closure forces the partnership to end.