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

Ravi falsely tells Anil that a flat is free from any mortgage, knowing it is mortgaged. Anil buys the flat relying on this statement and later discovers the mortgage. Which remedy is available to Anil under Section 19?

Anil may either avoid the contract or insist that it be performed and be put in the position he would have occupied had the statement been true, for example by having the mortgage redeemed. Section 19 gives this choice to the party deceived by fraud.

  1. AHe may only rescind the contract; he cannot insist on performance
  2. BHe may either avoid the contract, or insist on its being carried out and be put in the position as if the statement had been trueCorrect
  3. CHe must carry out the contract and has no other remedy
  4. DHe may insist on performance only if Ravi agrees

Explanation

Section 19 allows a party whose consent was caused by fraud to insist that the contract be performed and that he be put in the position he would have been in if the representations were true. Illustration (c) shows the buyer may avoid the contract or have it carried out with the mortgage redeemed. Rescission alone is therefore not the only choice.

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