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CSEET · Business Laws and Management · Elements of Law relating to Sale of Goods

Ramesh agrees by word of mouth to buy 50 kg of rice from Kiran Traders at an agreed price, with delivery and payment both to take place after one month. Assuming no other law requires writing, which statement is correct?

The contract is valid. A contract of sale may be made by word of mouth, subject to any other law, and the Act allows delivery or payment or both to be postponed. Neither writing nor immediate payment is needed for validity.

  1. AThe contract is invalid because delivery and payment are postponed
  2. BThe contract is invalid because it is not in writing
  3. CThe contract is valid because a contract of sale may be made by word of mouth and delivery or payment may be postponedCorrect
  4. DThe contract is valid only if the price is paid immediately

Explanation

Section 5(1) allows delivery or payment or both to be postponed. Section 5(2) allows a contract by word of mouth, subject to any other law requiring otherwise. So the oral contract with postponed performance is valid. The writing and immediate-payment options contradict these provisions.

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