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IAI Actuarial Core Principles · Business Management · Sources of Indian law and valid contracts

Priya, an actuary, promises to give her colleague Rohan a laptop she owns, purely out of friendship, and Rohan promises nothing in return. Rohan later sues when she changes her mind. The promise was oral and not registered. Which outcome is most consistent with the Indian Contract Act, 1872?

Rohan fails. The promise was gratuitous, so it lacks consideration, and the exception for natural love and affection needs a written, registered agreement between near relations. Friendship between colleagues does not qualify, so the agreement is void and not enforceable.

  1. ARohan succeeds because friendship is good consideration
  2. BRohan succeeds because any promise made by an adult is binding
  3. CRohan fails because the promise lacks consideration and no exception such as natural love and affection in a registered written agreement appliesCorrect
  4. DRohan fails only because the laptop value is not stated
  5. Rohan succeeds because Priya's promise is a voidable contract

Explanation

An agreement without consideration is void unless an exception applies. The exception for natural love and affection requires a written, registered agreement between near relations, and friendship between colleagues does not qualify. The promise is therefore void and not enforceable.

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