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

Meera, by fraud, tells Kiran that a plot she is selling is free from any mortgage, and Kiran buys it. The plot is in fact mortgaged. Under Section 19 of the Indian Contract Act, 1872, Kiran:

Kiran may either avoid the contract or insist on its being performed with the mortgage debt redeemed. Section 19 gives the party whose consent was caused by fraud the choice to be put in the position as if the representation had been true.

  1. Amay avoid the contract, or insist that it be carried out and the mortgage debt redeemedCorrect
  2. Bmay only avoid the contract and cannot insist on performance
  3. Cmust perform the contract because the mortgage was discoverable in the registry
  4. Dmay insist on performance only if Meera consents to redeem the mortgage

Explanation

Section 19 lets a party whose consent was caused by fraud or misrepresentation either avoid the contract or insist on performance and be put in the position as if the representation were true. Illustration (c) covers exactly this case of a mortgaged estate. The option that denies the right to insist on performance is wrong because the section expressly gives that right.

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