CMA Foundation · Fundamentals of Business Laws and Business Communication · Consideration and Legality of Object
Which of the following is an exception where the Indian Contract Act, 1872 states that no consideration is necessary?
The creation of an agency needs no consideration. Section 185 expressly provides that no consideration is necessary to create an agency, whereas a guarantee requires consideration, which Section 127 says may be anything done or promised for the principal debtor's benefit.
- AA contract of guarantee
- BA contract of sale of immovable property
- CA contract of indemnity
- DThe creation of an agencyCorrect
Explanation
Section 185 states that no consideration is necessary to create an agency. Section 127 shows that guarantee does need consideration, which may be anything done or promised for the benefit of the principal debtor. The other options are not named as exceptions in the text.
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