Ca foundation paper 2 - business law

25 April 2019
In November 2018 exam there was one question as under :
Mr. Ramesh promised to pay Rs. 50,000 to his wife Mrs. Lali so that she can spend the sum on her birthday. Mrs. Lali insisted her husband to make a written agreement if he really loved her. Mr. Ramesh made a written agreement and registered the agreement under the law.
Mr. Ramesh failed to pay the specified amount to his wife Mrs. Lali.
Now Mrs. Lali wants to file a suit against Mr. Ramesh and recover the promised amount. Referring to the applicable provisions of the Contract Act 1872, advise whether Mrs. Lali will succeed?

The suggested answer as posted on ICAI site shown the answer as under :
To create a valid contract, there must be an intention on the part of the parties to create legal relationship between them. In social agreements it is presumed that there is no intention to create legal relationship. So social or domestic types of agreements are not enforceable in court of law and hence they do not result into contracts.
In the given circumstances wife will not be able to recover the amount as it was a social agreement and the parties did not intend to create any legal relations.

Is this answer correct? Is there any relevance of section 25 of ICA which provides for exception to consideration - Out of natural love and affection, written registered agreement and close relation between the parties.

Please give answer with reason

Amol S Joglekar (Expert)

Click to Talk 07 June 2019
you are talking of exception to "No consideration no contract"
The question is aiming at "intention of the parties"
Please note the difference between the two.So to say husband and wife can very well enter into contract without consideration but then it has to have intentions to create legal relation. Intention to create legal relationship is missing in this and hence the answer.

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