Section 127 of TPA : Section 127: Onerous Gifts

Explanation using Example

Imagine that Mr. Smith receives a gift from his aunt, which includes a luxury car and a piece of real estate. The car is free of any debts, but the real estate comes with a substantial unpaid mortgage that exceeds the property's value. According to Section 127 of the Transfer of Property Act, Mr. Smith must either accept both the car and the real estate with its debt (the mortgage) or reject the entire gift. He cannot choose to accept only the car and reject the property.

Furthermore, if a young woman, Ms. Jones, who is not yet 18, is given a similar gift by a relative—a valuable painting free of encumbrances and a small business that is struggling with debt—she is not legally bound to take responsibility for the business's debt because she is not competent to contract. However, if Ms. Jones keeps the business after turning 18 and is fully aware of the debt, she would then be legally bound by the obligation associated with the gift.