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CS Professional · CSR and Social Governance · Societies and Trusts

Ms. Tara agrees in writing to sell her warehouse to Mr. Uday and takes an advance. Before the sale is completed, she sells and conveys the warehouse to Mr. Vikas, who knows of the agreement with Uday. What is the position of Vikas?

Vikas holds the warehouse for Uday to the extent necessary to give effect to Uday's contract. A buyer who takes property with notice of an earlier contract affecting it is bound by it, so his conveyance does not defeat Uday's claim.

  1. AHe holds the warehouse for Uday to the extent necessary to give effect to Uday's contractCorrect
  2. BHe is the absolute owner, because he has a registered conveyance
  3. CHe must hold the warehouse for Tara
  4. DHis purchase is cancelled and the warehouse returns to Tara

Explanation

A buyer who acquires property with notice of an existing contract affecting it holds it for the benefit of the earlier contracting party, to the extent needed to give effect to that contract. Vikas knew of Uday's agreement, so he is bound. Option B ignores that notice binds the later buyer.

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