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A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is…

Illustration (c) to section 23 states that "A's promise is the consideration for B's payment and B's payment is the consideration for A's promise and these are lawful…

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A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is wrecked on a certain voyage. How does section 23 of the Indian Contract Act, 1872 treat this arrangement?

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Correct answer C

Illustration (c) to section 23 states that "A's promise is the consideration for B's payment and B's payment is the consideration for A's promise and these are lawful considerations." B pays for protection against the loss of his own ship, which is in substance insurance and not a bet on an event in which he has no stake. That A's liability depends on a wreck makes the promise conditional; it does not take away its consideration.

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