Daily Passage Test for CLAT - Jan 21 MCQs & solutions Free

Section 25 of the Contract Act, as per the passage, states that agreements without consideration are void unless they meet certain conditions. These conditions include the agreement being in writing and registered, or falling under specific exceptions. Therefore, option B, which states that such agreements are void unless in writing and registered, is the correct answer. This is a fundamental principle of contract law, as it ensures that contracts have a basis in consideration to be legally enforceable.

The contract between ABC Ltd. and XYZ Ltd. remains valid because it involves the exchange of valuable raw materials, which constitutes valid consideration. Section 25 of the Contract Act stipulates that contracts lacking consideration are void, but it does not render contracts void based solely on the inadequacy of consideration. While the court may assess the adequacy of consideration to determine the voluntariness of consent, the contract remains valid as long as some consideration exists. In this instance, the supply of raw materials qualifies as valuable consideration, and thus, the contract is not void.
Option A is incorrect as the contract falls under the exception outlined in Section 25 of the Contract Act, which allows for valuable consideration like the supply of raw materials. Option B is also incorrect because the contract is not void due to inadequate consideration. It involves valuable consideration, and although the court may evaluate the adequacy of consideration to assess consent, the contract remains valid. Option C is not applicable since the exception in Section 25 of the Contract Act, which permits promises to pay debts barred by the law of limitation, does not pertain to the contract between ABC Ltd. and XYZ Ltd.
Therefore, the correct choice is D.

The passage outlines specific exceptions under Section 25 of the Contract Act where a contract can be valid even if it lacks consideration. One of these exceptions is when the contract is for compensating someone for their voluntary services in the past. Therefore, option B, which states that a contract can be valid when it is for compensating voluntary services in the past, is the correct answer. This exception recognizes that not all contracts require the traditional exchange of something valuable (consideration) to be legally binding.

The contract between Mr. X and Mr. Y remains valid because it falls within the exception specified in Section 25 of the Contract Act. This exception allows for contracts where the consideration is implied. In this particular case, while the contract doesn't explicitly state the consideration, it is understood that Mr. X is selling his car to Mr. Y for Rs. 2 lakhs. As long as some form of consideration exists, even if not explicitly mentioned, the contract is not void. Option A is inaccurate as the contract falls under the Section 25 exception, which covers contracts with implied consideration. Option B is also incorrect because the contract is not void due to insufficient consideration; rather, it involves implied consideration. Option C is not applicable as Section 25 of the Contract Act does not exempt contracts from requiring consideration; it merely addresses contracts with implicit rather than explicitly stated consideration.
Therefore, the correct choice is D.

Section 25 of the Contract Act, as mentioned in the passage, does not render a contract void solely due to the inadequacy of consideration. Instead, it allows for consideration to be taken into account to assess whether the consent to the contract was freely given. Inadequate consideration might suggest that the parties did not truly agree to the terms of the contract. Therefore, option C, which states that inadequacy affects the validity of consent, is the correct answer. This reflects the importance of ensuring that contracts are entered into willingly and with a clear understanding of the terms.