Concept:Dissolution of a partnership means the end of the partnership agreement and the winding up of its business relationship between the partners.
Explanation:A partnership can be dissolved by mutual consent of the partners or by an order of court.
It can also be dissolved automatically when a specified event occurs.
Such events include the death, bankruptcy, or insanity of a partner.
When a partner becomes insane, he or she cannot carry out partnership duties, so the other partners may seek dissolution through court.
Insanity of a partner is a legal ground for dissolving a partnership.
The death or resignation of an ordinary employee does not dissolve the partnership because an employee is not a partner.
Similarly, the liquidity position of the firm does not itself dissolve the partnership.
Thus, among the given alternatives, the correct cause for dissolution is the insanity of a partner.
Answer:C. insanity of partner.