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CS Professional · Drafting, Pleadings and Appearances · Drafting of Agreements, Deeds and Documents

Sunil Enterprises and Pooja Logistics sign an agreement that satisfies free consent, competent parties, lawful consideration and lawful object. A statute requires this class of agreement to be made in writing and registered, but the parties only made an oral agreement. How does the Indian Contract Act, 1872 treat this?

The oral agreement does not meet the legal requirement. Section 10 of the Indian Contract Act says nothing in it affects any law requiring a contract to be in writing, in the presence of witnesses, or registered. The statutory formality applies in addition to the basic essentials of a contract.

  1. AThe Act's general conditions override the statute, so the oral agreement is a valid contract
  2. BThe Act does not affect any law requiring writing, witnesses or registration, so the oral agreement does not satisfy the requirementCorrect
  3. CThe oral agreement becomes valid once consideration is paid
  4. DThe oral agreement is valid but only for half its value

Explanation

Section 10 states that nothing in it affects any law in force requiring a contract to be made in writing or in the presence of witnesses, or any law relating to registration of documents. The statutory formality still applies on top of the essentials. Meeting consent, capacity, consideration and object alone is therefore not enough here.

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