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CSEET · Business Laws and Management · Elements of Law of Contracts

Meena and Karan enter an agreement to which they gave free consent, both being competent. Meena later argues it is voidable because both of them wrongly believed a certain debt was barred by the Indian law of limitation, a law in force in India. Under Section 21, what is the position?

The contract is not voidable. Under Section 21, a mistake as to any law in force in India does not make a contract voidable, as the illustration on a debt believed barred by limitation shows. Only a mistake as to a law not in force in India is treated like a mistake of fact.

  1. AThe contract is voidable because of mutual mistake
  2. BThe contract is void because the mistake concerns law
  3. CThe contract is not voidable merely because of the mistake as to Indian lawCorrect
  4. DThe contract is voidable only at Karan's option

Explanation

Section 21 provides that a contract is not voidable because it was caused by a mistake as to any law in force in India. Its illustration uses the same limitation example, so the contract stays valid and is not voidable.

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