Section 31 of the Indian Contract Act, 1872 says that “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.”
Section 32 to 36 defines the enforcement and possibilities of the contingent contract.
A contract is a contingent contract when it depends on the happening of a specific future event. It may be upon the happening or not happening of an event. Instances of a contingent contract include the guarantee and insurance contacts.
The event upon which the performance of the given contract is contingent, or whereof happening or non – happening is caused by the said event, must not be included in the consideration of the said contract.
The contract may be for an uncertain happening, but it must not be contingent on the promisor and must be partially or entirely dependent on a future event.
The happening or non – happening of an event should serve as a security for the contract and should exist independently.
The objectives or purposes for which the contract has been made must be contingent upon an indeterminate future event.
It would not be regarded as a contingent contract if the fulfillment of the agreement is suddenly dependent on an event that may occur in the future but is certain to happen.
Types of contingent contracts:
- Section 32 of the Indian Contract Act, 1872 says that contingent contracts are enforced by law if they are to do or not to do a specific event.
In Nandkishore Lalbagh v. New Era Fabrics Pvt. Ltd. & Ors. the contract for the sale of land with a factory was contingent on the approval of the labor union and appropriate authority. Neither of them gave their approval. Hence the contract was not enforced.
- According to section 33, a contingent contract is enforced when they are to do or not do anything if a future event does not happen or becomes impossible.
Gian Chand v. Gopala & Ors according to the terms of the land sale contract, the earnest money would be repaid if the property was notified for acquisition. The land had already been notified, which the parties were unaware of. It became impossible to perform the contract.
- According to section 34, contracts are made up of conditions that can only be broken if a person does something that makes it impossible for him to act in a certain way at a certain time or subject to other conditions.
In Frost v. Knight, the defendant promised to marry the plaintiff but he marries another woman, so it becomes impossible to marry the plaintiff.
- Section 35 of the act states that Contracts that are contingent on the happening of a specified uncertain event within a predetermined period of time are void if at the end of that period, the event has not happened or if, before that period, it is no longer possible for it to happen.
When the given period has passed and the specified uncertain event has not happened, or before the specified time has expired, if it is certain that the specified uncertain event will not happen, contingent contracts to do or not do anything may be enforced by law.
- Section 36 of the Indian Contract Act, 1872 says that when the parties to the contract whether aware or not of the impossibility of the event of which the contract is made to do or not to do an act.
A contingent contract is a contract that is made with a promise to do or not to do act as collateral to a future event. The contract may not be for an impossible event, if an event becomes impossible to happen for which the contingent contact is made, the contract becomes void.
Indian Contract Act, 1872
Law of Contract Part I by R.K.Bangia; Edition 2006
Nandkishore Lalbagh v. New Era Fabrics Pvt. Ltd. & Ors. 2015 9 SCC 755 AIR 2015 SC 3796
Gian Chand v. Gopala & Ors, 1995 SCC (2) 528, JT 1995 (2) 513
Frost v. Knight, 1872 7 Ex. 111: 41 LJ Ex. 78: 26 LT 77
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