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

Anita agrees to sell her white horse to Bhaskar 'for rupees five hundred or rupees one thousand', with nothing to show which price applies. Bhaskar had already paid Rs. 500 as advance to Anita. Which statement is correct?

The agreement is void for uncertainty because the price cannot be determined, and Anita must return the Rs. 500 advance. Section 65 requires anyone who received an advantage under an agreement discovered to be void to restore it to the person who gave it.

  1. AThe agreement is void, and Anita must restore the Rs. 500 advance to BhaskarCorrect
  2. BThe agreement is valid, and Bhaskar must pay the lower price of Rs. 500
  3. CThe agreement is voidable, and Anita may choose either price
  4. DThe agreement is void, and Anita may keep the advance as compensation

Explanation

Nothing shows which price was intended, so the meaning is uncertain and the agreement is void under Section 29. Under Section 65, a person who has received an advantage under an agreement discovered to be void must restore it or compensate. So Anita must return the Rs. 500. Option D contradicts Section 65.

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