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CMA Foundation · Fundamentals of Business Laws and Business Communication · Breach of Contract and Remedies for Breach of Contract

Which of the following is covered by the Exception to Section 74, so that the person is liable on breach to pay the whole sum mentioned?

A person who forfeits a recognizance to appear in Court must pay the whole penalty, because bail-bonds and recognizances fall under the Exception to Section 74. Ordinary private bonds, loan interest clauses and routine government supply contracts do not qualify.

  1. AA supplier who gives a bond to a private company for timely delivery of goods
  2. BA person who gives a recognizance binding him in a penalty of Rs. 500 to appear in Court and forfeits itCorrect
  3. CA borrower who agrees to pay higher interest on default to a money-lender
  4. DA person who enters a commercial contract with Government for supplying stationery

Explanation

The Exception covers bail-bonds, recognizances and bonds for public duty. The illustration says a person who forfeits a recognizance is liable for the whole penalty. A contract with Government does not by itself involve a public duty, so the stationery contract is outside the Exception.

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