“Contingent contract” defined (घटनापेक्ष करार) (Section 31)

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.

Illustration

A contracts to pay to B Rs. 10,000 if B’s house is burnt. This is a contingent contract.

…. Sort of conditional contract and the condition is of uncertain event.

If the condition is absolute type…it is not contingent. For eg. :

A sells his house to B for RS. 10L is a absolute contract. But if

suppose A sell house to B for Rs 10L if B married to C in six months

then this type of contracts are contingent.

Example : to pay money on expiry of time or death of a person is not contingent, because they are certain. Accordingly all contracts of insurance except life insurance are contingent.

Steel Authority of India v. Tycoon Traders : A contingent contract failed because permission required by environment department, (which was a condition prerequisite to performance) was not granted by the department.

A contract will be no less contingent where the happening or non-happening of the contingency depends upon a will of a party. A situation of this kind was before the Madras High Court in Secy of State for India v. A.J. Arathoon : The case involved supply of timber to a Government department. The timber was to be approved by the superintendent of factory. He did not approve the timber actually supplied. The supplier sued the Government for breach of contract contending that, timber supplied corresponded with its description in the contract and therefore should have been approved.

The fact of approval being collateral to the performance of the contract, its performance could not be demanded till such approval.

Essential featues of contingent contract :

1. Valid contract : Contingent contracts are not void. Can be said as a one of the feature.

2. Dependant upon happening or not happening of some event.

3. Event is incidental(linked) to the main contract (collateral).

4. Not mere will of the parties to contract i.e. event should be uncertain out of either party’s control.

The section emphasis that the contingency contemplated by the contract must be collateral to the contract. It means that a contract has already arisen or a subsisting contract is there, but its performance cannot be demanded unless the event happens or does not happen.

Enforcement of contracts contingent on an event happening (Section 32)

Contingent contracts to do or nor to do anything in 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.

Illustrations

(a) A makes a contract with B to buy B’s horse if A survives C. This contract cannot be enforced by the law unless and until C dies in A’s lifetime.

(b) A makes a contract with B to sell a horse to B at a specified price, if C, to whom the horse has been offered, refuse to buy him. The contract cannot be enforced by law unless and until C refuses to buy the horse.

(c) A contracts to pay B a sum of money when B marries C. C dies without being married to B. The contract becomes void.

This section lays down two basic principles :

Firstly, can not be enforced, unless and until that event has happened.

Secondly, if the event becomes impossible, it is void.

V.P.Desa v. UOI : A car was insured against loss in transit, the car was damaged without being put in the course of transit. The insurer was held, not to be liable.

Collector of Customs v. Rakesh Press : A contract for sale of goods prescribing the condition that the goods would be inspected before despatch was held to be a firm contract.

Enforcement of contract contingent on an event not happening (Section 33)

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.

Illustration

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.

Where the performance of contract depends upon the non-happening of an event, naturally, the parties have to wait till the happening of that event becomes impossible.

When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person (Section 34)

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.

Illustrations

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.

Frost v. Knight : The defendant promised to marry plaintiff on the death of his father. While the father was still alive, he married another woman.

It was held that, it had become impossible that he should marry the plaintiff and she was entitled to sue him for the breach of the contract.

Time-bound contingency (Section 35)

When contracts become void, which are contingent on 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.

When contracts may be enforced, which are contingent on specified event not happening within fixed time :-

Contingent contract 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 become certain that such event will not happen.

Illustrations :

(a) A promises to pay B a sum of money if a certain ship returns within the year. The contract may be enforced if the ship returns within the year; and becomes void if the ship is burnt within the year.

(b) 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 a year, or is burnt within the year.

Agreements contingent on impossible events, void (Section 36)

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.

Illustrations

(a) A agrees to pay B 1,000 rupees if two straight lines should enclose a space. The agreement is void.

(b) A agrees to pay B 1,000 rupees if B will marry A’s daughter C. C was dead at the time of the agreement. The agreement is void

Summary

Section 31 : ‘Contingent contract’ defined.

Section 32 : Contingent on an event happening.

Section 33 : Contingent on an event not happening.

Section 34 : Contingent on future conduct of living person.

Section 35 : Contingent on happening of specified event within fixed time or not happening within fixed time.

Section 36 : Contingent on impossible events.