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

Ravi, by a misrepresentation, led Anil to believe that a factory produces 500 maunds of indigo annually. Anil examined the factory accounts, which showed only 400 maunds, and then bought the factory. Which statement is correct under Section 19 of the Indian Contract Act, 1872?

The contract is not voidable. Under the exception to Section 19, a misled party who had the means of discovering the truth with ordinary diligence cannot avoid the contract, and Anil actually saw accounts showing 400 maunds before buying.

  1. AThe contract is voidable at Anil's option because misrepresentation was made
  2. BThe contract is void because of mutual mistake
  3. CThe contract is not voidable because Anil had the means of discovering the truth with ordinary diligence and in fact examined the accountsCorrect
  4. DThe contract is voidable at Ravi's option

Explanation

Under the Exception to Section 19, a contract caused by misrepresentation is not voidable if the party had the means of discovering the truth with ordinary diligence. Anil even examined accounts showing 400 maunds, so his consent was not caused by the misrepresentation. Option one ignores this exception.

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