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Contingent contracts

Contingent contracts are agreements where the promisor's obligations depend on the occurrence of a specific event. They can only be enforced when the contingent event occurs or becomes impossible, and various scenarios dictate their enforceability based on the nature of the event. Key features include the event being collateral to the contract and not dependent on the promisor's will.

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10 views2 pages

Contingent contracts

Contingent contracts are agreements where the promisor's obligations depend on the occurrence of a specific event. They can only be enforced when the contingent event occurs or becomes impossible, and various scenarios dictate their enforceability based on the nature of the event. Key features include the event being collateral to the contract and not dependent on the promisor's will.

Uploaded by

Siyaa Karkera
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Contingent contracts

Monday, September 11, 2023 1:36 PM

The word contingent means when an event or situation is contingent, i.e. it depends on some other
event or fact. In simple words, contingent contracts are the ones where the promisor perform his
obligation only when certain conditions are met. The contracts of insurance, indemnity, and guarantee
are some examples of contingent contracts. 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 31). For example,
A contracts to pay B Rs. 10,000 if B's house is burnt. This is a contingent contract.

Essential features of a contingent contract


1. The performance of a contingent contract is made dependent upon the happening or nonhappening
of dome event.
2. The event on which the performance is made to depend, is an event collateral to the contract i.e., it
does not form part of the reciprocal promises which constitute the contract.
For example, where A agrees to deliver 100 bags of wheat and B agrees to pay the price only afterwards,
the contract is a conditional contract and not contingent, because the event on which B's obligation is
made to depend is a part of the promise itself and not a collateral event. Similarly, where A promises to
pay B Rs. 10,000 if he marries C, it is not a contingent contract.
3. The contingent event should not be dependent on the will of the promisor. For instance, if A
promises to pay B Rs. 1,000 if he so chooses, it is not a contingent contract. However, where the event is
within the promisor's will but not merely his will, it may be a contingent contract.

Enforcement of Contingent contract


1. Contract contingent on an event happening.
Contracts that are contingent upon an uncertain event cannot be legally enforced until that event has
occurred.
- For ex: A contract to sell a horse to B for Rs. 10,000 is not enforceable by law unless and until C, to
whom the horse has been offered, refuses to buy the horse.
2. Contracts contingent on the event not happening
A contract to do or not do something based on the occurrence of an uncertain future event can only be
enforced when it becomes impossible for that event to happen, and not before.
- For ex: A agrees to pay B a sum of money if a certain ship does not return. This ship is sunk. The
contract can be enforced when the ship sinks.

3. Contract contingent on the future conduct of a living person


If a contract is contingent on a future event being the way a person will act at an unspecified time, that
event is considered impossible when that person does something that makes it impossible for them to
act in that way within a specified time or in any way other than under future uncertainties.
- For ex: 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 afterward marry B.
4. Contracts Contingent on the happening of a specified event within a fixed time.
- 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 the time, such event has not happened, or if before the time
fixed, such event becomes impossible.
- For ex: 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.
5. Contracts contingent on not happening of specified event within a fixed time
- 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 has expired and such event has not happened, or,
before the time has expired, if it becomes certain that such event will not happen.
6. Agreements contingent on an impossible event (Sec 36)
- Agreements to do or not to do anything, if an impossible event happens, are void, whether the

contracts -1 Page 1
- 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.
- For ex: A agrees to pay B Rs. 1000/- if B marries C. C was dead at the time of the agreement. The
agreement is void.

contracts -1 Page 2

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