CONTINGENT CONTRACT

Introduction

The word contingent means when an event or situation is contingent, i.e. it depends on some other event or fact. for example, making money is contingent on finding a good-paying job. Now, the ‘contingent contract’ means enforceability of that contract is directly dependent upon the happening or not happening of an event.

SECTION31 of the Indian contract act 1872 defines the term ‘Contingent Contract’ as follows:‘A contingent contract is a contract to do or not to do something, if some event collateralto such contract does or does not happen. In simple words, contingent contracts, are the ones where the promisor performs his obligation only when certain conditions are met. The contracts of insurance, indemnity and guarantee are some examples of contingent contracts.

Illustration:- A contract to pay to B Rs. 20,000 if B’s house is burnt. This is a contingent.

Case laws– Chandulal Harjivandas v. CIT, In this case, it was held that all contracts of insurance and indemnity are contingent.

ESSENTIAL ELEMENT OF THE CONTINGENT CONTRACT

after examining the definition of the contingent contract given under section 31 of the Act, A the essentials of the term contingent contract are as follows-

There must be a valid contract to do or abstain from doing something-Section 32 and 33  of the Act talk about enforcement of the contingent contract on the happening or not happening of the events respectively. The contract will be valid only if it is about performing or not performing an obligation.

Illustration: X makes a contract with Y to buy Y’s dog if X survives Z. This contract cannot be enforced by law unless and until Z dies in X’s lifetime.

Illustration 2: X agrees to pay Y a sum of money if a certain ship does not return. The ship is sunk. The contract can be enforced when the ship sinks.

CONDITION WHEN A CONTINGENT CONTRACT BECOMES VOID

Section 32-if the event on the happening of which the contract is contingent becomes impossible, the contract becomes void.

Illustration:Mohan contracts to pay Ram a sum of Money when Ram marries Geeta. Geeta dies without being married to Ram. The contract becomes void.

Section 35-contingent contract to do or not to do something, if a specified uncertain event happens within a fixed time, becomes void if, at the expiration of the time fixed, such event has not happened, or if, before the time fixed, such event becomes impossible.

Illustration:Saurabh promises to pay Servesh if a certain ship returns within the year. The contract becomes void if the ship is burnt within the year.

Section 34-if the future event on which a contract is contingent is how 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.

Section 36- contingent agreement 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.

Illustration:X agrees to pay Y, Rs. 10,000 if Y will marry X’s daughter P. P was dead at the time of the agreement. The agreement is void.

CONCLUSION

What is described as ‘contingent contract’ in this topic is familiar to English law as ‘conditional contract’. For a contingent contract, there is a certain event that needs to be fulfilled. The term of these contracts are certain and depend on the occurrence or non-occurrence of a future event.

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