Professional Documents
Culture Documents
MEANING
According to 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.
When the performance of a contract is not immediately due but it becomes so only after the happening or non-happening of some contingency (i.e., some uncertain event) it is known as Contingent Contract.
CONT.
Thus, it is a contract, the performance of which is dependent upon, the happening or non-happening of an uncertain event, collateral to such contract. Contingent contracts are also known as, Conditional Contract.
void The contract of insurance, contract of indemnity and guarantee are the examples of contingent contract.
COLLATERAL EVENT
performance directly promised as part of the contract, nor the whole consideration for a promise. It is an event which does not form part of consideration of the contract, and is independent of it. For example, Steve contracts to pay Rs 50000 to Edward, a contractor, for constructing a building, provided the construction is approved by the particular government organization.
CONTRACT
C O N D I T O N A L
CONTINGENT CONTRACT
Collateral Event
CONT
The contingent event should not be mere will of the promisor. The event must be an act of the party. There must be a valid contract.
Contracts contingent on an event happening Contracts contingent on the event not happening Contracts contingent on the future conduct of a living person Contracts contingent on happening of specified event within fixed time Contracts contingent on not happening of specified event within a fixed time Agreements contingent on impossible event
EXAMPLES
Alex makes a contract with Bob to buy Bob's horse if Alex survives Charlie. This contract cannot be enforced by law unless and until Charlie dies in Alex's life time.
Alex makes a contract with Bob to sell a house to B at a specified price, if Charlie to whom the house has been offered, refuses to buy it. The contract cannot be enforced by law unless and until Charlie refuses to buy the house.
Alex contracts to pay Bob a sum of money when Bob marries Jane, dies without being married to Bob. The contract become void.
EX AMPLE
A agrees to pay B a sum of money if a certain cargo plane does not return. The plane crashes on its way. The contract can be enforced when the plane gets crashed. Because when the plane crashes the event becomes impossible as the plane can never return. Thus enforceability depends upon the impossibility of the contingent event. Until the event becomes impossible, the contract cannot be enforced
EX AMPLE
A agrees to pay B a sum of money if Bs son S marries his daughter C. S marries D. The marriage of S to C must now be considered impossible, although it is possible that D may die and that S may afterwards marry C.
According to Sec. 35, "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
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
EXAMPLES
A agrees to pay B Rs.1,000 if two straight lines should enclose a space. The agreement is void Sam agrees to give Sim his house, if Sim proves that earth is actually flat in shape.
A contingent contract is a contract to do or not to do something if some uncertain event collateral to such contract does or does not happen. The happening of event is uncertain; but if it happens there arises a contract. Eg. Contract of insurance. A wagering contract means a bet. It is about happening or non-happening of an event with mutual chance of profit or loss. SIMILARITY : Both contingent contract and wager depends on happening of future events which must be uncertain at the time of contract
It consists of reciprocal of promises It is of contingent in nature. It is a void contract. The future event is the sole dependent of the contract.
Example: P and Q enter into an agreement that if Australias team wins the test match, P will pay Rs. 100 and if it loses Q will pay Rs. 100 to P
DIFFERENCE BETWEEN CONTINGENT CONTRACTS AND WAGERING AGREEMENTS CONTINGENT WAGERING BASIS
CONTRACT Mutual Promise
The contract need not contain any mutual promises.
In a contingent contract, the future event is merely collateral or incidental to the contract. In a contingent contract, parties do have some other interest in the subject matter. They are interested in the occurrence or non-occurrence of the event.
CONTRACT
The contract is bound by mutual and reciprocal promises.
In a wagering agreement the future event is the sole determining factor of the contract In wagering agreement, the parties to the agreement have no other interests in the subject matter of the agreement, except for the stake
Future Event
The uncertain event may be within the power of one of the parties.
Validity
Nature
Void Agreement
Contingent contract is not Wagers are void. void unless it is dependent on the occurrence of an impossible event
THANK YOU