Mod 1. 8 Contingent Contract

7/25/2019 Mod 1. 8 Contingent Contract

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CONTINGENT CONTRACT


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1.A Contract may be:(i). An absolute contract or

(ii). A Contingent contract.

An absolute contract is one in wic te!romisor bin"s imsel# to !er#ormance inany e$ent witout any con"itions.

A contingent contract is a contract to "o or

not to "o someting i# some e$ent%collateral to suc contract% "oes or "oesnot a!!en.

Example: A Contracts to !ay Rs. 1&%&&& i#

's ouse is burnt. Tis is a contingent


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. Essential Caracteristics o# contingent contract:

1. Its !er#ormance "e!en"s u!on te a!!eningor non*a!!ening in #uture o# some e$ent.

. Te e$ent must be uncertain.

+. Te uncertain #uture e$ent must be collateralto te contract.

Note: Contracts o# insurance% in"emnity an"guarantee are te most common instances o#a contingent contract.


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Rules regar"ing contingent

contracts:1. Contingent contracts "e!en"ent on te a!!ening o# anuncertain #uture e$ent cannot be en#orce" until tee$ent as a!!ene". I# te e$ent becomes im!ossible%suc contracts become $oi" (,ec. +)

Example: A contracts to !ay ' on sum o# money wen 'marries C. C "ies witout being marrie" to '. tecontract becomes $oi".

. -ere a contingent contract is to be !er#orme" i# a!articular e$ent "oes not a!!en% its !er#ormance can

be en#orce" wen te a!!ening o# tat e$ent becomesim!ossible.

Example: A agrees to sell is car to ' i# C "ies. Tecontract cannot be en#orce" so long as C is ali$e.


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Rules regar"ing contingentcontracts:+. I# a contract is contingent u!on ow a !erson will

act at an uns!ecie" time% te e$ent sall beconsi"ere" to become im!ossible wen suc!erson "oes anyting wic ren"ers it im!ossible

tat e soul" so act witin any "enite time% oroterwise te un"er #urter contingencies. (,ec+/)

Example: A agrees to !ay ' a sum o# money i# '

marries C. C marries 0. te marriage o# ' to Cmust now be consi"ere" im!ossible% altoug itis !ossible tat 0 may "ie an" tat C maya#terwar"s marry '.


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Rules regar"ing contingentcontracts:/. Contingent contracts to "o or not to "o

anyting% i# a s!ecie" uncertain e$enta!!ens witin a e" time% become $oi" i#te e$ent "oes no a!!en or its a!!ening

becomes im!ossible be#ore te e!iry o# tattime.

2. Contingent agreements to "o or not to "oanyting% i# an im!ossible e$ent a!!ens%are $oi"% weter or not te #act is 3nown tote !arties. (sec +4)


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agreement an" a contingent

contract

1. A wagering agreement consists o# reci!rocal!romises wereas a contingent contract may notcontain reci!rocal !romises.

. A wagering agreement is essentially o# acontingent nature wereas a contingent contractmay not be o# a wagering nature.

+. A wagering agreement is $oi" wereas acontingent contract is $ali".

/. In a wagering agreement% te !arties a$e no

oter interest ece!t te winning or losing o# teamount o# wager.

2. In a wagering agreement te #uture e$ent is tesole "etermining #actor.

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Mod 1. 8 Contingent Contract