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

Kiran Enterprises orders 100 units of a component from Vikas Ltd. Only Kiran Enterprises wrongly believes the component is compatible with its machine, a fact Vikas Ltd. never represented or knew about. Kiran later wants to avoid the contract on that ground. Which statement is correct?

The contract is not voidable merely because Kiran alone was mistaken. Section 22 states that a unilateral mistake as to a matter of fact does not make a contract voidable, and Section 20 needs both parties to be mistaken. No fraud or misrepresentation is present.

  1. AThe contract is void under Section 20 because a fact was misunderstood
  2. BThe contract is voidable at Kiran's option under Section 19
  3. CThe contract is void because consent was not free
  4. DThe contract is not voidable merely because Kiran alone was under a mistake as to a matter of factCorrect

Explanation

Only one party was mistaken, so Section 20 (which needs both parties to be mistaken) does not apply. Section 22 states that a contract is not voidable merely because one party was under a mistake as to a matter of fact. Section 19 voidability covers coercion, fraud or misrepresentation, none of which exist here.

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