CA Foundation Exam > CA Foundation Questions > Which of the following statement is false?a)G...
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Which of the following statement is false?
- a)Generally a stranger to a contract cannot sue.
- b)A verbal promise to pay a time barred debt is valid.
- c)Completed gifts need no consideration.
- d)No consideration is necessary to create an agency.
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Which of the following statement is false?a)Generally a stranger to a ...
False Statement: A verbal promise to pay a time barred debt is valid.
Explanation:
A time-barred debt is a debt that is past its statute of limitations. The statute of limitations is a legal time limit that restricts the period within which a creditor can sue a debtor for repayment of a debt. Once the statute of limitations expires, the creditor loses the legal right to sue the debtor for the debt.
In this context, a verbal promise to pay a time-barred debt is not valid. The promise to pay the debt is not enforceable because the statute of limitations has expired. Therefore, the creditor cannot sue the debtor for repayment of the debt.
The other statements are true:
a) Generally, a stranger to a contract cannot sue: This means that a third party who is not a party to the contract cannot sue for breach of contract. Only parties to the contract have the legal right to enforce the terms of the contract.
b) Completed gifts need no consideration: This means that once a gift is given and accepted, it is legally binding and does not require any consideration. Consideration is something of value that is exchanged between parties to a contract.
c) No consideration is necessary to create an agency: This means that an agency relationship can be created without any consideration. An agency relationship is a legal relationship in which one person (the agent) acts on behalf of another person (the principal) and represents the principal in business dealings with third parties.
In conclusion, a verbal promise to pay a time-barred debt is not valid. The other statements are true.
Explanation:
A time-barred debt is a debt that is past its statute of limitations. The statute of limitations is a legal time limit that restricts the period within which a creditor can sue a debtor for repayment of a debt. Once the statute of limitations expires, the creditor loses the legal right to sue the debtor for the debt.
In this context, a verbal promise to pay a time-barred debt is not valid. The promise to pay the debt is not enforceable because the statute of limitations has expired. Therefore, the creditor cannot sue the debtor for repayment of the debt.
The other statements are true:
a) Generally, a stranger to a contract cannot sue: This means that a third party who is not a party to the contract cannot sue for breach of contract. Only parties to the contract have the legal right to enforce the terms of the contract.
b) Completed gifts need no consideration: This means that once a gift is given and accepted, it is legally binding and does not require any consideration. Consideration is something of value that is exchanged between parties to a contract.
c) No consideration is necessary to create an agency: This means that an agency relationship can be created without any consideration. An agency relationship is a legal relationship in which one person (the agent) acts on behalf of another person (the principal) and represents the principal in business dealings with third parties.
In conclusion, a verbal promise to pay a time-barred debt is not valid. The other statements are true.
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Which of the following statement is false?a)Generally a stranger to a ...
False Statement: A verbal promise to pay a time barred debt is valid.
Explanation:
- A time-barred debt is a debt that is past the statute of limitations, which means that the creditor can no longer legally sue the debtor for payment.
- In general, a verbal promise to pay a time-barred debt is not legally enforceable because there is no consideration to support the promise.
- Consideration is the bargained-for exchange of value between the parties to a contract, and it is necessary to create a legally binding agreement.
- If there is no consideration, there is no contract, and a promise to pay a time-barred debt is unenforceable.
- Therefore, the statement that a verbal promise to pay a time-barred debt is valid is false.
Other Statements:
a) Generally, a stranger to a contract cannot sue.
- This statement is true. A stranger to a contract is someone who is not a party to the contract, and they cannot sue to enforce the terms of the contract because they have no legal rights or obligations under it.
b) Completed gifts need no consideration.
- This statement is true. A completed gift is a transfer of property from one person to another without any expectation of receiving something in return. Since there is no consideration involved, a completed gift does not require a contract to be legally binding.
c) No consideration is necessary to create an agency.
- This statement is true. An agency relationship is created when one person (the principal) gives another person (the agent) the authority to act on their behalf. Consideration is not necessary to create this relationship because the agent is not promising to do anything in exchange for the authority to act on behalf of the principal.
Explanation:
- A time-barred debt is a debt that is past the statute of limitations, which means that the creditor can no longer legally sue the debtor for payment.
- In general, a verbal promise to pay a time-barred debt is not legally enforceable because there is no consideration to support the promise.
- Consideration is the bargained-for exchange of value between the parties to a contract, and it is necessary to create a legally binding agreement.
- If there is no consideration, there is no contract, and a promise to pay a time-barred debt is unenforceable.
- Therefore, the statement that a verbal promise to pay a time-barred debt is valid is false.
Other Statements:
a) Generally, a stranger to a contract cannot sue.
- This statement is true. A stranger to a contract is someone who is not a party to the contract, and they cannot sue to enforce the terms of the contract because they have no legal rights or obligations under it.
b) Completed gifts need no consideration.
- This statement is true. A completed gift is a transfer of property from one person to another without any expectation of receiving something in return. Since there is no consideration involved, a completed gift does not require a contract to be legally binding.
c) No consideration is necessary to create an agency.
- This statement is true. An agency relationship is created when one person (the principal) gives another person (the agent) the authority to act on their behalf. Consideration is not necessary to create this relationship because the agent is not promising to do anything in exchange for the authority to act on behalf of the principal.
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Which of the following statement is false?a)Generally a stranger to a contract cannot sue.b)A verbal promise to pay a time barred debt is valid.c)Completed gifts need no consideration.d)No consideration is necessary to create an agency.Correct answer is option 'B'. Can you explain this answer?
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