Law · Indian Contract Act

Under Section 61 of the Indian Contract Act, 1872, how should a payment be applied if the outstanding debts are of equal standing in time?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1The creditor decides which debt to prioritize, disregarding the equal standing.
2The payment must be applied in discharge of each debt proportionally.✓
3The payment should be applied entirely to the smallest debt to reduce the number of outstanding debts.
4The eldest debt must be discharged in full before applying the payment to the next.

Correct answer

The payment must be applied in discharge of each debt proportionally.

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