Legal Liability and Damages
A partner who breaches the terms of the deed may be held legally liable to compensate the firm and co-partners for any loss or damage caused.

• The aggrieved partners can sue for damages under the Indian Partnership Act
  
• Courts may award monetary compensation for direct and consequential losses
  
• The firm may recover profits made dishonestly by the erring partner
  
• If the breach involves fraud, civil and criminal liability may apply
  
• Legal fees and court costs may also be recovered from the guilty partner
  

Expulsion or Suspension of the Partner
If the deed includes an expulsion clause, a partner in breach may be legally removed from the firm by a majority or unanimous decision.

• Expulsion must be carried out in good faith and as per the deed
  
• The expelled partner must be given notice and a fair opportunity to explain
  
• Upon removal, the partner may forfeit rights to future profits
  
• The settlement of capital and profit share must follow the agreed exit procedure
  
• Expelled partners may still be liable for previous firm liabilities
  

Right to Seek Dissolution of the Firm
A serious or repeated breach may lead to the dissolution of the partnership firm, either mutually or through court intervention.

• Other partners can dissolve the firm if trust is broken
  
• Under Section 44 of the Indian Partnership Act, a court may order dissolution for breach of agreement, misconduct, or willful neglect
  
• The firm’s assets must be liquidated, liabilities settled, and remaining assets distributed
  
• Dissolution brings all operations to an end unless reconstituted
  
• The firm’s reputation and business continuity may be at risk
  

Financial and Operational Disruption
Breaching partnership terms affects everyday operations, investor confidence, and employee morale.

• Leads to disputes over financial statements, asset use, or contracts
  
• Creates distrust and miscommunication among the remaining partners
  
• May result in delayed projects, missed opportunities, or contract losses
  
• Banks, vendors, and clients may lose confidence in the firm
  
• Partners may face difficulties in decision-making and future planning
  

Reputational Damage and Loss of Goodwill
The firm may suffer reputational harm in the eyes of stakeholders, clients, and the business community.

• Negative publicity may affect long-standing client relationships
  
• Breach by one partner reflects poorly on the entire firm
  
• Potential clients and employees may reconsider engagement
  
• Trust-based partnerships become harder to sustain
  

May attract regulatory scrutiny depending on the nature of the breach