Mostly all the partnership firm closes through the closure agreement between the partners. In this mode, all the partners of a company come forward and sins an agreement that indicated the closure of the company. Such a closure involves the mutual settlement of all the pending liabilities. The partners also settle all the accounts among them. Thus, in this mode, there is no third party intervention. The closure without third party interference may happen due to numerous reasons such as:
1) Insolvency among the partners
2) Unlawful business practiced by one of the partners in the name of partnership firm
3) In case of the term of the partnership expires
4) Death of one of the partners
5) Resignation of the partner
It can also be done when one of the partners sends notice in writing to another for dissolution