Contingent Contingent ContractContract

Presented By-Kavish RajKiniya TomorManish MishraManoj Lohiya

IntroductionIntroduction

The performance of an absolute contract becomes due immediately after making the contract. But sometimes , the performance of a contract is not immediately due , and it become so only after the happening or non-happening of some contingency . Such contract are known as contingent contract. 

Example:- 

◦Contract of insurance◦Contract  of indemnity◦Contract  of guarantee.

  Definition of a Contingent Definition of a Contingent Contract Contract 

◦The contingent contract , may be defined as a conditional contract.

“A Contingent contract is a contract  to do something if some event , collateral to such contract , does or does not happen. ’’

Section 31 Of Indian Contract Act

Example:- 

◦Mr.X contract to pay 10,000 Rs to Mr.Y . But if Mr.Y  house is burnt . Then this is a contingent contract as its performance is dependent upon an uncertain event.(i.e., burning of Mr.Y house).

Essentials Elements For A Essentials Elements For A Valid Contingent ContractValid Contingent Contract

◦There must be a valid contract.◦The performance of the contract

must be conditional.◦The event must be uncertain.◦The event must be collateral to the

contract.

Legal Rules For A Valid Legal Rules For A Valid Contingent ContractContingent Contract

◦The event may be an act of the party.

◦The event should not be the discretion of the promisor.

Rules Regarding Rules Regarding Enforcement Of Contingent Enforcement Of Contingent ContractContract

◦Contingent  contract dependent on the ‘happening’ of future uncertain event.(Section 32)

◦Contingent contract dependent on the ‘non-happening’ of future uncertain event.(Section 33)

◦Contingent contract dependent on the ‘happening’ of specified uncertain event ‘within fixed time’. (Section 35)

◦Contingent contract dependent on the ‘non-happening ’ of specified uncertain event ‘within fixed time’.(Section 35)

◦Contingent contract dependent on impossible event.(Section 36)

Contingent Contracts Dependent Contingent Contracts Dependent On The ‘Happening’ Of Future On The ‘Happening’ Of Future Uncertain EventUncertain Event

Contingent contract is dependent on the ‘happening’ of a future uncertain event. In such cases, the contract can be enforced only when that uncertain event has happened .(Section 32)

Example:- A contract to pay Rs.1000 to B when he (B) married C. But C died before the marriage .In this case the contract becomes void as B’s marriage with C has become impossible. 

Contingent Contract Dependent On The Contingent Contract Dependent On The ‘Non-happening’ Of Future Uncertain ‘Non-happening’ Of Future Uncertain EventEvent  In such cases , the contract can be enforced

only when the happening of that even becomes impossible as then that event cannot happen .And then the contract becomes enforceable as its performance was dependent on the non-happening of that event (Section 33)

Example - a agreed to pay b rs. 500 if a certain ship did not return .The ship was sunk. It is a contingent contract and can be enforced by law when the ship sinks. Because ship can never return .

    Contingent Contract Dependent On The Contingent Contract Dependent On The ‘Happening’ Of Specified Uncertain ‘Happening’ Of Specified Uncertain EventEventWithin Fixed TimeWithin Fixed Time In such cases, the contract can be enforced

if that event happens within the fixed time. Thus, a contingent contract dependent on the happening of specified uncertain event within fixed time, becomes void in the following cases (Section 35).

If the event does not happen within the specified time ; or

If before the expiry of that time, the event becomes impossible.

Example:- A agreed to pay Rs.1000 to B if a certain ship returned within a year . It is a contingent contract and can be enforced by law if the ship returns within a year.

Contingent Contracts Dependent On The Contingent Contracts Dependent On The ‘Non-happening’ Of Specified Uncertain ‘Non-happening’ Of Specified Uncertain Event Within Fixed Time Event Within Fixed Time   A contingent contract dependent on the ‘non-

happening’ of a specified event within a fixed time, can be enforced in the following cases;-

If that event does not happen within the fixed time ; or

If before the expiry of that time, it becomes certain that the event will not happen (Section 35, second Para).

Example;- a agreed to sell his house to b for Rs. 100,000, if the farther did not return from America within three year. It is a contingent contract and can be enforced if A’s father does not return within three year.

Contingent Contracts Contingent Contracts Dependent On Impossible Dependent On Impossible EventEvent In such cases, the contract is void and

cannot be enforced by law. That such contract will be void whether the impossibility of the event is known or not to the parties at the time of making the contract.[section 36]

Example;- A agreed to pay Rs.500 to B if he proved that two straight lines can enclosed a spaces. This is a void agreement as two straight lines can never enclose a space.

Event Becoming Impossible Event Becoming Impossible Which Is A Future Conduct Of Which Is A Future Conduct Of Living PersonLiving Person

That contingent contract in section 34 of Indian contract act, which reads as under;-

“ If the future event on which the contract is contingent is the way in which a person will at an unspecified time, the event shall be considered to become impossible when such person does anything which readers it impossible that he should so act within any definite time , or otherwise than under further contingencies.”

Example;- A agreed to pay Rs. 5000 to B if the (B) married C. But subsequently, C married D. In this case the marriage of B with C must now be considered impossible. When possible if D dies and C may afterwards marry B.

 

Comparison Between Comparison Between Contingent Contract And A Contingent Contract And A Wagering AgreementWagering Agreement

Contingent Contract Wagering AgreementContingent Contract Wagering Agreement

1. it is perfectely valid it is absolutely void and cannot enforced and cannot

enforcedand can be enforced in a court of law.in a court of law.

2.In this case,the future In this case,the uncertain event is uncertain event is merely collateral or the only

determining Incidental. Factor.

ContinueContinue……

Contingent Contract Wagering AgreementContingent Contract Wagering Agreement

In this case,there may In this case,there arebe reciprocal promises. reciprocal promises.

All contingent contracts All wagering agree-

are not or a wagering ment are also cont-nature,because are not ingent contracts be-of a wagering nature , cause they are

because all the contingent they are dependent

contracts are not void. on uncertain event.