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CSEET · Business Laws and Management · Elements of Law of Contracts

Ramesh and Suresh entered into a contract believing that a particular debt was barred by the Indian law of limitation, though in fact it was not. What is the effect on the contract under the Indian Contract Act, 1872?

The contract is not voidable. Under Section 21, a mistake about any law in force in India does not make a contract voidable. The parties' wrong belief about the Indian law of limitation does not give either of them a right to avoid the contract.

  1. AThe contract is void because both parties made a mistake
  2. BThe contract is voidable at the option of the party who was misled
  3. CThe contract is not voidable, because a mistake as to a law in force in India does not make it voidableCorrect
  4. DThe contract is illegal because of the mistake of law

Explanation

Section 21 says a contract is not voidable because it was caused by a mistake as to any law in force in India. The illustration given is exactly a mistaken belief that a debt is barred by the Indian law of limitation. So the contract stays valid and enforceable.

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