Source: RTP,June20235 Marks
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Question Scenario

State which of the following agreements are valid contract under the Indian Contract Act, 1872? a) A, who owns two cars is selling red car to B. B thinks he is purchasing the black car. b) A threatened to shoot B if he (B) does not lend him `2,00,000 and B agreed to it. c) A agrees to sell his house to B against 100 kgs of cocaine (drugs). d) A ask B if he wants to buy his bike for ` 50,000. B agrees to buy bike. e) Mr. X agrees to write a book with a publisher. But after few days, X dies in an accident.

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Suggested Answer

a) A, who owns two cars is selling red car to B. B thinks he is purchasing the black car. There is no consensus ad idem and hence not a valid contract. b) A threatened to shoot B if he (B) does not lend him `2,00,000 and B agreed to it. Here the agreement is entered into under coercion and hence not a valid contract. c) A agrees to sell his house to B against 100 kgs of cocaine (drugs). Such agreement is illegal as the consideration is unlawful. d) A ask B if he wants to buy his bike for ` 50,000. B agrees to buy bike. It is agreement which is enforceable by law. Hence, it is a valid contract. e) Mr. X agrees to write a book with a publisher. But after few days, X dies in an accident. Here the contract becomes void due to the impossibility of performance of the contract.

Exam Strategy Tip

When answering law questions in the CA Foundation exam, follow the "Provision -> Facts -> Conclusion" structure for maximum marks. Ensure to state the relevant sections where applicable to earn bonus marks from the evaluator.

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