Chapter-6 - Contingent and Quasi Contract

 Contingent Contract
Meaning and Definition: The term ‘contingent contract’, in simple words, may be defined as a
conditional contract. This term, in legal words, is defined under Section 31 of the Indian Contract
Act, as “A contract to do or not to do something, if some event, collateral to such contract,
does or does not happen”.
Contracts of Insurance, indemnity and guarantee fall under this category.

Essentials of a Contingent contract

(a) The performance of a contingent contract would depend upon the happening or
non-happening of some event or condition. The condition may be precedent or
subsequent.
(b) The event referred to is collateral to the contract. The event is not part of the contract.
The event should be neither performance promised nor a consideration for a
promise.
(c) The contingent event should not be a mere ‘will’ of the promisor. The event should be
contingent in addition to being the will of the promisor.
(d) The event must be uncertain. Where the event is certain or bound to happen, the
contract is due to be performed, then it is a not contingent contract.
Rules relating to Enforcement

The rules relating to enforcement of a contingent contract are as follows:

(a) Enforcement of contracts contingent on an event happening: Where a
contract identifies happening of a future contingent event, the contract cannot be
enforced until and unless the event ‘happens’. If the happening of the event
becomes impossible, then the contingent contract is void.
(b) Enforcement of contracts contingent on an event not happening: Where a
contingent contract is made contingent on a non-happening of an event, it can be
enforced only when its happening becomes impossible.
(c) A contract would cease to be enforceable if it is contingent upon the
conduct of a living person when that living person does something to make
the ‘event’ or ‘conduct’ as impossible of happening.
Section 34 says that “if a contract is contingent upon as to how a person will act at
an unspecified time, the event shall be considered to have 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”.
(d) Contingent on happening of specified event within the fixed time: Section 35
says that Contingent contracts to do or not to do anything, if a specified uncertain
event happens within a fixed time, becomes void if, at the expiration of time fixed,
such event has not happened, or if, before the time fixed, such event becomes
impossible.
(e) Contingent on specified event not happening within fixed time: Section 35
also says that - “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”.
(f) Contingent on an impossible event: 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.

Difference between a contingent contract and a wagering agreement

Sr. Basis of difference Contingent contract Wagering agreement

No
.
1. Meaning A contingent contract is a A wagering agreement is a
contract to do or not to do promise to give money or
something with reference to a
money’s worth with reference
collateral event happening
not happening. to or an uncertain event
happening or not happening.
2. Reciprocal promises Contingent contract may not A wagering agreement consists
contain reciprocal promises. of reciprocal promises.
3. Uncertain event In a contingent contract, the In a wagering contract, the
event is collateral. uncertain event is the core
factor.
4. Nature of contract Contingent contract may not be A wagering agreement is
wagering in nature. essentially contingent in nature.
5. Interest of contracting Contracting parties have The contracting parties have
parties interest in the subject no interest in the subject
matter in contingent matter.
contract.
6. Doctrine of mutuality Contingent contract is not A wagering contract is a
of lose and gain based on doctrine of game, losing and gaining
mutuality of lose alone matters.
and gain.
7. Effect of contract Contingent contract is valid. A wagering agreement is void.

 Quasi Contract:
Meaning and Definition: A valid contract must contain certain essential elements, such as
offer and acceptance, capacity to contract, consideration and free consent. But sometimes the
law implies a promise imposing obligations on one party and conferring right in favour of the
other even when there is no offer, no acceptance, no genuine consent, lawful consideration,
etc. and in fact neither agreement nor promise. Such cases are not contracts in the strict
sense, but the Court recognises them as relations resembling those of contracts and
enforces them as if they were contracts. These are called Quasi- Contract (i.e. resembling a
contract). Quasi contracts are based on principles of equity, justice and good conscience.

Types of Quasi Contract

Claim for necessaries supplied to persons incapable of contracting: Sometimes, a person

supplies the necessaries to a person who is not competent to contract (i.e., minor, persons of
unsound mind such as lunatics, etc.), or to another person to whom the incompetent person is
bound to support. In such cases, the person supplying the necessaries is entitled to recover the
cost of necessaries from the property of such incompetent person even if there is no valid
contract between them.

Payment by an interested person: Sometimes, a person makes the payment which is the
legal duty of another person. In such cases, the person who has made the payment can
recover such money from the person who is legally bound to pay. Following conditions must be
satisfied for the recovery of payment by an interested person:

(a) The person making the payment must have some interest in paying the amount.

(b) The person making the payment must not be bound by law to pay the amount.

(c) The other person from whom the money is to be recovered must be legally bound to pay the
money.

Obligation of person enjoying benefits of non-gratuitous ac t: As per the Act “where a

person lawfully does anything for another person, or delivers anything to him not intending to do
so gratuitously and such other person enjoys the benefit thereof, the latter is bound to pay
compensation to the former in respect of, or to restore, the thing so done or delivered”. It thus
follows that for a suit to succeed, the plaintiff must prove:

(i) that he had done the act or had delivered the thing lawfully;
(ii) that he did not do so gratuitously; and
(iii) that the other person enjoyed the benefit out it.

Responsibility of finder of Goods : ‘A person who finds goods belonging to another and
takes them into his custody is subject to same responsibility as if he were a bailee. Thus a
finder of lost goods has the following duty:

(i) To take proper care of the property as man of ordinary prudence would take of
own goods.
(ii) No right to appropriate the goods and
(iii) To restore the goods if the owner is found.

Money paid by mistake or under coercion: “A person to whom money has been paid or
anything delivered by mistake or under coercion must repay or return it”. Every kind of
payment of money or delivery of goods for every type of ‘mistake’ is recoverable.