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CMA Foundation · Fundamentals of Business Laws and Business Communication · Discharge of Contracts

Vikram agrees to pay ₹1,00,000 to Neeta on a specified day but fails to pay. Because of the delay Neeta is unable to pay her own debts and is financially ruined. Under illustration (n) to Section 73, what can Neeta recover?

Neeta can recover the principal sum plus interest up to the day of payment. The financial ruin she suffered is a remote and indirect loss, which Section 73 does not compensate.

  1. AThe principal sum with interest up to the day of payment, but not the loss from her ruinCorrect
  2. BThe principal sum and compensation for her total financial ruin
  3. COnly the principal sum with no interest
  4. DNothing, because payment on the specified day was not essential

Explanation

The illustration states the defaulting party is not liable for anything except the principal sum together with interest up to the day of payment. Her ruin is a remote and indirect loss. Option B ignores the exclusion of remote loss.

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