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X undertakes to repay Y a loan of Rs. 1,00,000 by five equal monthly instalments, with a stipulation…

The stipulation is not by way of penalty. Section 74, illustration (f), of the Indian Contract Act, 1872 permits acceleration of the outstanding loan on default of an…

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X undertakes to repay Y a loan of Rs. 1,00,000 by five equal monthly instalments, with a stipulation that, in default of payment of any instalment, the whole shall become due—

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Correct answer B

The stipulation is not by way of penalty. Section 74, illustration (f), of the Indian Contract Act, 1872 permits acceleration of the outstanding loan on default of an instalment: it advances the payment date without increasing the debt.

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