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A cement dealer receives advance payment for 100 bags of cement. At the time of payment he genuinely…

The decisive question for cheating is whether the dealer deceived the buyer when inducing payment. Section 318 illustration (g) distinguishes an initially honest promise…

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A cement dealer receives advance payment for 100 bags of cement. At the time of payment he genuinely intends to deliver them and makes no deceptive representation. He later breaches the contract by failing to deliver. What follows from these facts?

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Answer and explanation

Correct answer B

The decisive question for cheating is whether the dealer deceived the buyer when inducing payment. Section 318 illustration (g) distinguishes an initially honest promise later broken from a promise made without intent to perform.

The given facts also show no entrustment or dishonest conversion. They establish a civil breach of contract.

Option feedback

Option A

The dealer honestly intended to perform when paid. Later non-performance alone does not establish deception inducing payment.

Option B

The later failure to deliver is a breach. The facts establish neither initial deception nor entrustment or dishonest conversion of property.

Option C

The facts show ordinary payment under a contract and no dishonest misappropriation or conversion of another’s movable property.

Option D

An ordinary contractual advance does not, by itself, show entrustment for a trust purpose or dishonest misuse of entrusted property.

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