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CMA Intermediate · Business Laws and Ethics · Indian Contracts Act, 1872

A pays B Rs 1,000 in return for B's promise to marry C, A's daughter. Unknown to both, C was already dead when the promise was made. Which statement is correct under the Act?

The agreement is void, yet B must repay A the Rs 1,000. Section 65 says that when an agreement is discovered to be void, anyone who received an advantage under it must restore it or compensate the person from whom it was received.

  1. AThe agreement is valid and B may keep the money
  2. BThe agreement is voidable at A's option and B may keep the money until A sues
  3. CThe agreement is void, but B must repay A the Rs 1,000Correct
  4. DThe agreement is void and neither party can recover anything

Explanation

Under Section 65, when an agreement is discovered to be void, a person who received an advantage must restore it. Illustration (a) gives exactly this case: the agreement is void but B must repay the Rs 1,000. Saying nothing is recoverable ignores Section 65.

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