CMA Foundation · Fundamentals of Business Laws and Business Communication · Void and Voidable Agreements, No Consideration No Contract
Under the Indian Contract Act, 1872, Ravi promises to give his friend Imran Rs. 5,000 as a birthday present and receives nothing in return. Imran later sues for the amount. What is the legal position?
The agreement is void. Ravi's promise of Rs. 5,000 has no consideration from Imran, and none of the Section 25 exceptions applies: it is not a registered written promise between near relations, not compensation for past service, and not a time-barred debt. So Imran cannot enforce it.
- AThe agreement is void for want of consideration, as no exception appliesCorrect
- BThe agreement is voidable at Ravi's option
- CThe agreement is a valid contract because a promise to give a gift is binding
- DThe agreement is valid because the amount is small
Explanation
An agreement made without consideration is void unless it falls within one of the exceptions in Section 25. Here there is no written and registered document made out of natural love and affection between near relations, no compensation for past voluntary service, and no promise to pay a time-barred debt. The agreement is therefore void, not merely voidable, and Imran cannot sue.
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