Right of partners to have business wound up after dissolution.
The right of partners to have the partnership business wound up after dissolution is a fundamental principle in partnership law. It ensures that when a partnership ends, the partners are fairly treated and the business affairs are properly settled.
🔹 Right of Partners to Have Business Wound Up After Dissolution
đź“Ś 1. Legal Basis
Upon dissolution, every partner has the right to insist on the winding up of the partnership affairs unless:
There is an agreement to the contrary, or
The partnership is being reconstituted (i.e., continued with remaining partners).
This right is recognized in most legal systems, such as:
Partnership Act 1890 (UK) – Section 38
Uniform Partnership Act (USA)
Indian Partnership Act, 1932 – Section 46
📌 2. What “Winding Up” Involves
Winding up means:
Completing unfinished business
Settling debts and obligations
Realizing (selling) assets
Paying creditors
Distributing the remaining assets among the partners
đź“Ś 3. Rights of the Partners During Winding Up
Right to participate in the winding-up process.
Right to have the business affairs conducted properly.
Right to a share of surplus assets after liabilities are settled.
Right to an accounting (each partner can demand a full account of partnership assets, liabilities, and profits).
Right to indemnity for liabilities incurred during proper winding up.
đź“Ś 4. Limitations or Exceptions
A partner may lose this right if:
They wrongfully caused the dissolution (e.g., breached the partnership agreement).
There is a specific agreement stating the partnership continues despite one partner’s withdrawal or death.
The business is sold as a going concern (the buyer takes over and partners agree not to wind up).
đź“Ś Example
If three partners dissolve their firm, each has the right to:
Ensure all business debts are paid,
Recover any capital they invested, and
Share equally (or as per agreement) in any remaining profits or assets.
If one partner tries to continue the business without consent or refuses to liquidate assets, the others can seek court intervention to enforce their winding-up rights.
âś… Summary
| Right | Explanation |
|---|---|
| Right to wind up | Every partner has the right to have the business affairs settled after dissolution |
| Includes | Settling debts, selling assets, distributing surplus |
| Protects | Partners from being left liable or excluded from fair distribution |
| Enforceable by | Agreement or court order if necessary |
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