Legal Principle : A contract entered into by the use of misrepresentation is voidable at the option of the other party.
Facts of the Problem : Lalit with an intention to deceive Rahul into buying his cement factory, falsely stated that his factory is capable of producing 2,000 kg of cement per day. However, in reality, the factory only has a production capacity of 500 kg/ day. Rahul gets induced and agrees to buy the factory. Is it a valid contract?
  • a)
    The contract is a valid one and Rahul must buy the factory.
  • b)
    The contract is voidable at the option of Rahul due to misrepresentation by Lalit.
  • c)
    The contract is void due to false claims made by Lalit in relation to his factory.
  • d)
    The price of the contract could be reduced to commensurate with the reduced production capacity of the factory.
Correct answer is option 'B'. Can you explain this answer?

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Answers

Notes Wala
Jan 20, 2022
In the instance situation, Lalit has misrepresented the production capacity of the cement factory to induce Rahul into buying the factory. Thus, the contract is voidable at the option of Rahul due to misrepresentation of lalit. The Section 18 of the Indian Contract Act, 1872 deals with it. Hence, option B is correct.

In the instance situation, Lalit has misrepresented the production capacity of the cement factory to induce Rahul into buying the factory. Thus, the contract is voidable at the option of Rahul due to misrepresentation of lalit. The Section 18 of the Indian Contract Act, 1872 deals with it. Hence, option B is correct.
In the instance situation, Lalit has misrepresented the production capacity of the cement factory to induce Rahul into buying the factory. Thus, the contract is voidable at the option of Rahul due to misrepresentation of lalit. The Section 18 of the Indian Contract Act, 1872 deals with it. Hence, option B is correct.