Skip to content

CS Professional · Drafting, Pleadings and Appearances · Commercial Contract Management

Rohan owes Sameer ₹10,000 under a contract. They agree that Rohan will instead give Sameer a mortgage of his estate for ₹5,000 in place of the debt. Which statement is correct under Section 62?

The arrangement is a new contract that extinguishes the old ₹10,000 debt. Under Section 62, when parties agree to substitute a new contract for the original, the original need not be performed, even if the new obligation is smaller.

  1. AThe arrangement is a new contract that extinguishes the old debt of ₹10,000Correct
  2. BThe old debt of ₹10,000 survives alongside the mortgage
  3. COnly ₹5,000 of the old debt is extinguished and ₹5,000 survives
  4. DThe arrangement is void for inadequacy of the amount

Explanation

Where parties agree to substitute a new contract, the original contract need not be performed. The mortgage for ₹5,000 in place of the ₹10,000 debt is a new contract that extinguishes the old. The survival options wrongly treat the new agreement as merely additional.

Did you get it right without looking?

One question tells you little. A timed set on Commercial Contract Management shows your real accuracy, how long you take and where you lose marks.

Practise Commercial Contract ManagementFree diagnostic mock

More Commercial Contract Management questions