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CMA Foundation · Fundamentals of Business Laws and Business Communication · Void and Voidable Agreements, No Consideration No Contract

Anil finds Bhavesh's lost wallet and returns it without being asked. Bhavesh then promises to pay Anil Rs. 500. Which statement is correct under the Indian Contract Act, 1872?

The promise is a contract. Section 25(2) validates a promise to compensate a person who has already voluntarily done something for the promisor, even though no consideration was agreed beforehand. Returning the lost wallet is such an act, and no writing or registration is needed.

  1. AThe promise is void, as Anil's act was past consideration
  2. BThe promise is a contract, as it compensates a person who voluntarily did something for the promisorCorrect
  3. CThe promise is a contract only if it is registered
  4. DThe promise is void unless Anil gave notice before returning the wallet

Explanation

Section 25(2) makes a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor a contract. Illustration (c) is on similar facts, where A finds B's purse and B promises Rs. 50. No writing or registration is required for this exception.

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