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Subject to the safeguards in section 53(1) of the Transfer of Property Act, 1882, what is the effect of…

Under section 53(1) of the Transfer of Property Act, 1882, a transfer made to defeat or delay creditors is voidable at the option of a creditor so defeated or delayed. The…

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Subject to the safeguards in section 53(1) of the Transfer of Property Act, 1882, what is the effect of a transfer of immovable property intended to defeat or delay the transferor’s creditors?

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Answer and explanation

Correct answer C

Under section 53(1) of the Transfer of Property Act, 1882, a transfer made to defeat or delay creditors is voidable at the option of a creditor so defeated or delayed. The provision preserves the rights of a transferee in good faith and for consideration and preserves applicable insolvency law. An avoidance suit under the subsection must be on behalf of, or for the benefit of, all creditors.

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Option A

Section 53(1) makes the transfer voidable at a qualifying creditor’s option. It is not void from the outset.

Option B

The power to avoid under section 53(1) is given to a creditor defeated or delayed by the transfer.

Option C

A creditor defeated or delayed by the transfer may seek to avoid it, subject to section 53(1).

Option D

Section 53(1) gives a creditor defeated or delayed the option of avoiding the transfer.

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