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

Kavita owes Rs. 20,000 to Lalit, but the debt is barred by limitation. She orally promises to pay Rs. 10,000 towards it. Later she signs a written promise to pay Rs. 10,000 towards the debt. Which is correct under Section 25?

Only the signed written promise is enforceable. Section 25(3) allows a promise to pay wholly or in part a time-barred debt to be a contract only if it is in writing and signed by the person to be charged or her authorised agent. The oral promise is void.

  1. ABoth promises are enforceable, as part payment is allowed
  2. BOnly the oral promise is enforceable
  3. CNeither promise is enforceable, as the debt is time-barred
  4. DOnly the signed written promise is enforceableCorrect

Explanation

Section 25(3) validates a promise to pay wholly or in part a time-barred debt only if it is made in writing and signed by the person to be charged or her authorised agent. The oral promise fails this requirement and is void for want of consideration. The signed written promise for part of the debt is covered, as in illustration (e).

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