CONTINGENT CONTRACT
Define the Contingent Contract as per Section 31. Also, explain the provisions related to the enforcement of contingent contracts under the Indian Contract Act 1872.
As per Section 31 of the Indian Contract Act 1872, a “contingent contract” is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen. Example- A contracts to pay B Rs. 10,000 if B’s house is burnt. This is a contingent contract.
The essentials of a Contingent contract are as follows-
- The contract is contingent on the happening or the non-happening of an event.
- The happening or non-happening of the event should be collateral to the contract and should exist independently i.e. it cannot be the performance promised or a consideration for a promise.
- The event should not be a mere will of the promisor. It has to be completely futuristic in nature.
- The contract’s event must take place in the future and be unpredictable. A contract is not termed contingent if its performance is contingent on a future occurrence that is certain to occur.
- A Legitimate Contract must exist to do or Refrain from Doing Anything.
Sections 32 to 36 deal with the enforcement of the contingent contracts-
Section 32- Enforcement of contracts contingent on an event happening:
Contingent contracts to do or not to do anything if an uncertain future event happens cannot be enforced by law unless and until that event has happened.
If the event becomes impossible, such contracts become void.
Example- A makes a contract with B to buy B’s horse if A survives C. This contract cannot be enforced by law unless and until C dies in A’s lifetime.
Section 33- Enforcement of contracts contingent on an event not happening:
Contingent contracts to do or not to do anything if an uncertain future event does not happen can be enforced when the happening of that event becomes impossible, and not before.
Example- A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk. The contract can be enforced when the ship sinks.
Section 34-When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person:
If the future event on which a contract is contingent is the way in which a person will act at an unspecified time, the event shall be considered to become impossible when such person does anything which renders it impossible that he should so act within any definite time, or otherwise than under further contingencies.
Example- A agrees to pay B a sum of money if B marries C. C marries D. The marriage of B to C must now be considered impossible, although it is possible that D may die and that C may afterwards marry B.
Section 35-When contracts become void which are contingent on the happening of specified event within fixed time:
Contingent contracts to do or not to do anything if a specified uncertain event happens within a fixed time, become void if, at the expiration of the time fixed, such event has not happened, or if, before the time fixed, such event becomes impossible.
Example- A promises to pay B a sum of money if a certain ship returns within a year. The contract may be enforced if the ship returns within the year, and becomes void if the ship is burnt within the year.
When contracts may be enforced, which are contingent on specified event not happening within fixed time-
Contingent contracts to do or not to do anything, if a specified uncertain event does not happen within a fixed time may be enforced by law when the time fixed has expired and such event has not happened or, before the time fixed has expired, if it becomes certain that such event will not happen.
Example- A promises to pay B a sum of money if a certain ship does not return within a year. The contract may be enforced if the ship does not return within the year, or is burnt within the year.
Section 36- Agreement contingent on impossible events void:
Contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made.
Example- A agrees to pay B 1,000 rupees if two straight lines should enclose a space. The agreement is void.
