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CMA Foundation · Fundamentals of Business Laws and Business Communication · Capacity of Parties, Free Consent

Arjun misrepresents to Bhavna that a factory produces 500 maunds of indigo annually. Before buying, Bhavna examines the factory accounts, which show only 400 maunds, and still buys it. Under Section 19, the contract is:

The contract is not voidable. Under the Exception to Section 19, a party who had the means of discovering the truth with ordinary diligence, such as by examining the accounts, cannot avoid the contract for misrepresentation.

  1. Avoidable, because any misrepresentation makes a contract voidable
  2. Bvoid, because the consent was not free
  3. Cvalid and not voidable, because she did not rely on the misrepresentation
  4. Dnot voidable, because she had the means of discovering the truth with ordinary diligenceCorrect

Explanation

The Exception to Section 19 says that where consent was caused by misrepresentation, the contract is not voidable if the party had the means of discovering the truth with ordinary diligence. Illustration (b) gives this very situation. The option citing voidability ignores the Exception.

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