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

Kiran owed Dev Rs 20,000, but the debt became time-barred under the law of limitation. Kiran then made the following promise to Dev. Which promise creates an enforceable contract under Section 25?

A written promise signed by Kiran to pay Rs 10,000 towards the time-barred debt is enforceable. Section 25(3) requires the promise to be in writing and signed by the person to be charged, and it may cover the debt wholly or in part. Oral or unsigned promises fail.

  1. AAn oral promise to pay Rs 10,000 towards the debt
  2. BA written promise signed by Kiran to pay Rs 10,000 towards the debtCorrect
  3. CA written promise by Kiran, unsigned, typed by a clerk, to pay Rs 20,000
  4. DA written promise signed by Dev agreeing to accept Rs 10,000

Explanation

Section 25(3) requires a promise, made in writing and signed by the person to be charged or his authorised agent, to pay wholly or in part a time-barred debt. Part payment is allowed, so the signed written promise for Rs 10,000 is valid. The oral promise lacks writing, and the unsigned one lacks a signature. Dev's signature is irrelevant since Kiran is the person charged.

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