Release Between Two Partners On Dissolution Of Partnership

Release Between Two Partners On Dissolution Of Partnership

This document is for the release between two partners known as first and second party respectively on dissolution of partnership. Therefore, as per this deed, first party releases the second party. and also the second party releases the first party. from all sums of money, accounts, proceedings, claims and demands whatsoever which either of them at any time had or has up to the date of the said dissolution against the other, in respect of or in relation to the said partnership or the business of the said partnership.


Dissolving a partnership firm means discontinuing the business under the name of said partnership firm. In this case, all liabilities are finally settled by selling off assets or transferring them to a particular partner, settling all accounts existed with the partnership firm. Any profit/ loss is transferred to partners in their profit sharing ratio as agreed by them in the partnership deed.

dissolution of partnership firm is triggered when some predefined conditions as per the Partnership Act of 1932 are met such as:

  1.   Dissolution by Agreement
  2.   Dissolution by Notice
  3.   Dissolution by the Court
  4.   Compulsory Dissolution
  5.   Conditional Dissolution

 

Mode of settlements of accounts

  •      Losses which also includes the deficiency of capital must be paid out profits first then out of capital and lastly by individual partners in proportions in which they were supposed to share their profits had the firm been not dissolved  
  •     The assets of the firm to make up decencies of capital must be used in the following  manner:
  •      First to third parties.
  •      Second to partners for advances made by them.
  •       Third to each partner in proportion that is due to them for capital contribution.   
  •         The remaining amount if left would be divided among the partners in proportion to their share profit ratio.

 

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