Question

X owes Y Rs.20, 000 but this debt is barred by Limitation Act. X executes a written promise to pay Y Rs.15, 000 on account of debt. This is

• A. Invalid
• B. Void
• C. Valid
• D. Voidable

Hint:

Remember the three main exceptions to the "no consideration, no contract" rule in Section 25: (1) Promise out of natural love and affection, (2) Promise to compensate for past voluntary services, and (3) Promise to pay a time-barred debt. These are frequently tested scenarios.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The question deals with the enforceability of a promise to pay a debt that is 'time-barred', meaning it can no longer be legally recovered through a court due to the expiry of the period prescribed by the Limitation Act. The general rule is that an agreement without consideration is void.
Step 2: Detailed Explanation:
Section 25 of the Indian Contract Act, 1872, provides exceptions to the rule that an agreement made without consideration is void.
Specifically, Section 25(3) states that a promise, made in writing and signed by the person to be charged therewith, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits, is a valid contract.
Let's apply the conditions to the given problem:
1. Is there a promise to pay a time-barred debt? Yes, X promises to pay a debt barred by the Limitation Act.
2. Is the promise in writing? Yes, "X executes a written promise".
3. Is it signed by the person to be charged? This is implied by "executes".
4. Does it matter that the promise is for a lesser amount (Rs. 15,000 instead of Rs. 20,000)? No, the section explicitly allows a promise to pay the debt "wholly or in part".
Since all the conditions of Section 25(3) are met, the promise is a valid and enforceable contract, despite the original debt being time-barred and the new promise being without fresh consideration.
Step 3: Final Answer:
A written promise to pay a time-barred debt, even if for a partial amount, is a valid contract under the exception provided in Section 25(3) of the Indian Contract Act. Therefore, option (C) is correct.