Assignment-4

1. Mistake as to the identity of the contracting parties can bring a valid contract into
existence.

This statement is false

Reason in support
Mistake as to the identity of the contracting parties cannot bring a valid contract into
existence because the agreement is void where a unilateral mistake relates to the identity
of the person contracted with or as to the nature of the contract.
Example: One Blenkarn, knowing that Blenkarn & Co. was a reputed customer of Lindsay
& Co. placed an order with Lindsay & Co. by imitating the signature of Blenkarn. The
goods were then sold to Cundy, an innocent buyer. A suit was filed by Lindsay & Co.
against Cundy for recovery of goods. It was held that there was no contract between
Lindsay & Co. and Blenkarn as Lindsay & Co. never intended to contact with Blenkarn
and as such, Cundy could not get a good title and hence he must return the goods or
make payment of goods. ( Cundy vs Lindsay & Co. )

2. A time barred debt is enforceable by law

This statement is false

Reason in support: A time barred debt is not enforceable by law because according to
the Law of Limitation Act, a debt which remains unpaid or unclaimed for a period of 3
years becomes a time barred debt which is legally not recoverable. However a
promissory note issued in personal capacity by the wife of a debtor to pay his time barred
debt of her husband is not enforceable. [Pestonjee vs Bai Meharbai]

3. Money transferred under an illegal agreement can be recovered by filing a suit in

the court of law.

This statement is false

Reason in Support: Illegal agreements are those agreements which are void- ab-initio,
i.e. void from the very beginning and are punishable by the criminal law of the country or
by any special legislation/regulation.
Illegal Agreement has following effect.
i) The collateral transactions to an illegal agreement also become illegal and hence
cannot be enforced
ii) No action can be taken for the recovery of money paid or property transferred under
an illegal agreement and for the breach of an illegal agreement.
iii) In case of an agreement containing the promise some part of which is legal and other
part illegal and if the illegal part cannot be separated from the legal part then the whole
agreement is altogether illegal and cannot be enforced. However if the illegal part can
 be separated from the legal part then the Court will enforce the legal part and reject the
illegal part.

4. A contract involving personal skill can be performed by the legal heirs.

This statement is false

Reason in Support: A contract involving personal skill cannot be performed by the legal
heirs because personal skill need expertise and knowledge of a particular profession/
field. It cannot be expected by the legal heir that they have the same level of skill or have
same level of interest in that profession.

5. A new contract cannot replace an old contract.

This statement is false.

Reason in Support: According to Section 62 of the Indian Contract Act, 1872

Novation means the substitution of a new Contract for the original contract. Such a new
contract may be either between the same parties or between different parties. The term
of contracts may or may not be changed. The consideration for the new contract is the
discharge of the original contract.

Example: A owes money to B under a contract. It is agreed between A, B and C that B

shall henceforth accept C as his debtor, instead of A. The old debt of A to B no longer
exists and a new debt from C to B has been contracted.