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CMA Foundation · Fundamentals of Business Laws and Business Communication · Consideration and Legality of Object

Arjun found the lost wallet of Kiran, a stranger, and returned it without being asked. Later Kiran promised Arjun Rs. 500 for this act. Which statement is correct under the Indian Contract Act, 1872?

The promise is a contract. Section 25 exempts a promise to compensate someone who has already voluntarily done something for the promisor. Arjun returned the wallet voluntarily, and Kiran then promised Rs. 500, so no fresh consideration, writing or registration is needed.

  1. AThe promise is void because Arjun's act was past and gave no consideration
  2. BThe promise is void because it is not in writing
  3. CThe promise is a contract because it compensates a person who already voluntarily did something for the promisorCorrect
  4. DThe promise is a contract only if Kiran registers it

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, even without fresh consideration. Arjun voluntarily returned the wallet to Kiran, who then promised payment. Writing and registration are not needed for this exception. Distractor A is wrong because this exception exists exactly for past voluntary acts.

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