Model Answer
0 min readIntroduction
The Indian Contract Act, 1872, lays down the fundamental principles governing contracts in India. A crucial element for a valid contract is ‘consideration’, which essentially means something of value exchanged between the parties. However, the enforceability of a promise to pay a debt that is barred by limitation is a complex legal issue. The Limitation Act, 1963, prescribes the time within which legal proceedings must be initiated, and debts not pursued within this timeframe become legally unenforceable. This question requires an analysis of whether a subsequent promise to pay a time-barred debt constitutes a valid contract.
Understanding Consideration and Past Consideration
Section 2(d) of the Indian Contract Act, 1872 defines consideration as something which constitutes ‘desire’ of the promisor. It can be a benefit to the promisor or a detriment to the promisee. However, ‘past consideration’ is generally not valid consideration. Past consideration means an act already done before making the promise. Section 2(d) explicitly states that past consideration does not constitute valid consideration.
The Impact of the Limitation Act, 1963
The Limitation Act, 1963, provides statutes of limitations for various legal proceedings. For debts, the limitation period is generally three years from the date the debt becomes due (Article 3 of the Limitation Act, 1963). Once this period expires, the debt becomes ‘time-barred’ and is no longer legally recoverable through a court of law. However, the debt itself is not extinguished; it merely loses its legal enforceability.
Analysis of the Given Scenario
In the present case, A owed B ₹1,000, but the debt was barred by the Limitation Act, 1963. This means B had lost the legal right to recover the debt through court proceedings. Subsequently, A signed a written promise to pay ₹1,000 on account of the previous debt. This is a crucial point.
Is the Subsequent Promise Enforceable?
The question of whether this subsequent promise is enforceable has been addressed in several landmark cases. The principle established is that a clear and unequivocal promise to pay a time-barred debt, made in writing, constitutes a fresh agreement. This fresh promise creates a new cause of action, and the limitation period begins to run from the date of the new promise. This is based on the principle of ‘revival of debt’.
The case of Abdul Fattah v. Ram Prasad (1916) 38 All ER 585 established that a written promise to pay a time-barred debt is enforceable, creating a new contract. The key requirement is that the promise must be explicit and unconditional, clearly indicating an intention to pay the debt.
Therefore, in this scenario, A’s written promise to pay ₹1,000 on account of the previous debt is a valid and enforceable agreement. The limitation period restarts from the date of this promise. B can now legally enforce the debt based on this new promise.
Distinction between Acknowledgement and Promise
It’s important to distinguish between a mere acknowledgement of the debt and a promise to pay. A simple acknowledgement, without an explicit promise to pay, does not revive the debt. However, a clear and unambiguous promise, as in this case, does.
Conclusion
In conclusion, while a debt barred by the Limitation Act, 1963, is not legally recoverable, a subsequent written promise to pay that debt constitutes a fresh agreement and revives the debt. This is based on the principle of consideration for a new promise and the revival of the cause of action. Therefore, the agreement between A and B is valid and enforceable, with the limitation period commencing from the date of the new promise. This highlights the importance of clear and explicit promises in legal agreements.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.