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

Which of the following is a correct statement about the scope of Section 67 of the Indian Contract Act, 1872?

Section 67 applies where the promisee neglects or refuses to give the promisor reasonable facilities for performance and non-performance is caused by that neglect. It operates as an excuse for the promisor, not as an automatic compensation provision or a cost-increase relief.

  1. AIt applies when a promisee neglects or refuses to afford reasonable facilities and non-performance is caused by that neglectCorrect
  2. BIt applies whenever the promisor finds performance more expensive than expected
  3. CIt applies only if the promisee neglects facilities in writing
  4. DIt makes the promisee liable to pay compensation to the promisor automatically

Explanation

Section 67 requires neglect or refusal by the promisee to afford reasonable facilities and non-performance caused by it. Higher cost is not covered. The section speaks only of excusing the promisor, with no writing requirement and no automatic compensation.

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