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

Ramesh agrees to buy a painting from Sunita for Rs 2,00,000, both believing it to be worth about Rs 2,00,000. Later an expert values it at only Rs 40,000. Both parties were honest. Which statement is correct?

The agreement is not void under Section 20. The Explanation to that section says an erroneous opinion about the value of the thing sold is not a mistake as to a matter of fact, so a wrong belief about price or worth does not invalidate the contract.

  1. AThe agreement is void because both were mistaken about the value
  2. BThe agreement is voidable at Ramesh's option because of the mistake
  3. CThe agreement is not void under Section 20, since an erroneous opinion as to value is not a mistake of factCorrect
  4. DThe agreement is void only if Sunita also wishes to cancel it

Explanation

The Explanation to Section 20 states that an erroneous opinion as to the value of the subject-matter is not deemed a mistake as to a matter of fact. So Section 20 does not make the agreement void. Option one wrongly treats value as a fact.

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