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CA Foundation · Business Laws · The Indian Contract Act, 1872

Sandeep owes Rs 8,000 to Mohan on a loan, but the debt became time-barred last year. In writing, Sandeep signs a promise to pay Mohan Rs 5,000 towards that debt. Under the Indian Contract Act, 1872, this promise is:

The promise is valid. A written and signed promise by the debtor to pay a time-barred debt, wholly or in part, is an exception to the no-consideration-no-contract rule, so Mohan can enforce it for Rs 5,000 without giving fresh consideration.

  1. AVoid, because the debt is time-barred and the promise lacks consideration
  2. BVoid, because Sandeep promised only part of the debt
  3. CValid, because a written and signed promise to pay a time-barred debt needs no considerationCorrect
  4. DValid only if Mohan gives fresh consideration

Explanation

A written, signed promise to pay wholly or in part a debt which the creditor could have enforced but for the law of limitation is enforceable without consideration. Part payment promised is also covered. Option B is wrong since the exception expressly covers a promise to pay a part.

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