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CSEET · Business Laws and Management · Elements of Law of Contracts

Sunita and Tarun enter a contract grounded on the mistaken belief that a particular debt is barred by the Indian law of limitation. Which statement is correct under the Act?

The contract is not voidable. A mistake as to any law in force in India does not make a contract voidable, as the illustration on a debt wrongly believed to be time-barred shows. Only a mistake about a foreign law is treated like a mistake of fact.

  1. AThe contract is voidable because of mistake of law
  2. BThe contract is void ab initio for mutual mistake
  3. CThe contract is not voidable because a mistake as to a law in force in India does not make it soCorrect
  4. DThe contract is unenforceable until a court confirms it

Explanation

Section 21 says a contract is not voidable because it was caused by a mistake as to any law in force in India. The illustration involves exactly the erroneous belief that a debt is barred by Indian limitation law. Only a mistake as to a law not in force in India is treated like a mistake of fact.

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