CONTINGENT CONTRACT

VALIDITY OF CONTRACT : CONTINGENT CONTRACT
INTRODUCTION
A Contract is enforceable by law in keeping with the section 2(h) of the Indian Contract Act, 1872. For each contract, there is a free consent of
the parties that are competent to each other for a lawful consideration and object as given under section 10 the said Act. However, the consent of
the parties for performing the contract shall be free from coercion, undue influence, etc. As provisions made under the Indian Contract Act, 1872
is predicted on Sir Pollock’s definition that states any contract and the ability to perform a contract is considered to be valid when it is
enforceable by court of law. Therefore, for the creation of any Contract, there should be a lawful consent, wherever the considerations are paid
or secure that shall be implemented beneath law.

Contracts can be classified into two groups on the basis of conditions:

Absolute Contracts: These are the contracts where there’s condition and can be performed in all circumstances.

Contingent Contracts: These are the contracts where there’s a condition and also known as the “Conditional Contracts”.

The word Contingent normally suggests that ‘Subject to Change’. It’s a form of conditional contract during which performance becomes due
solely upon the happening or non happening of some event which is of sure nature. Therefore, uncertainty is the symbol of the longer term. Once
the contract is obligated and condition is satisfied among the parties then they have to perform their obligations. If the situations obligatory

within the contract aren’t satisfied then the contingent contract becomes void and it needn’t to be performed. So, a Contingent Contract is to be
performed under some circumstances solely. Therefore, Section 31 to 36 of the said Act deals with the Contingent Contracts. [1]
According to Section 31 of the Indian Contract Act, 1872 it defines Contingent Contract as the contract to try to do or not to do something, if
some events collateral to such contract will or doesn’t  happen. That means the performance of a contract depends upon some unsure event. If
the events happen, the contract will be performed and if the events don’t happen it’ll not be performed. For example: There is a contract between
A and B for which A has to pay B Rs. 20,000 if B’s house burnt in any circumstances. Here, it is commonly regarded as a contingent contract
because the performance of such contract depends on contingency that is unsure. The simplest way to determine whether the contract is
contingent or not, is uncertainty. If contingency is for certain it’s not a contingent contract however if the consistency is uncertain then, it’s a
contingent contract. Therefore, all contracts of insurance (except life insurance) guarantee and indemnity are contingent contracts. There are few
essential parts of a Contingent contract.

ESSENTIALS OF CONTIGENT CONTRACT

  1. Performance of the Contract
    The performance of the contract must be conditional i.e. condition for which the contract has been entered into must be a future event, and it
    should be uncertain.
  2. Contingency Relate to Collateral Matters
    highlights that the contingency has contemplated by the contract must be collateral to the contract. It means that a contract already arisen or a
    subsisting contract is there, but its performance cannot be demanded unless the contemplated event happens or does not happen.
  3. Will of the Party

The particular event so considered as for contingency must depend on the act of the party but it does not depend on the will of the party.A
contract for sale of goods enjoin the condition that the goods would be inspected before despatch was held to be a firm contract. The import of
materials agreeable to such a contract was valid.

  1. Uncertain Event

If the event is sure to happen, then the contract is due to be This is not a contingent contract. The event should be uncertain.

RULES REGARDING PERFORMANCE OF A CONTINGENT CONTRACT

 The following are the rules regarding performance of a contingent contract:

1. Contingent contract upon the happening of a future uncertain event :

When the happening of such event has possible it becomes enforced and if the happening of such event becomes impossible it becomes void.
EX: ‘A’ contracts to pay ‘B’ a sum of money when ‘B’ marries ‘C’.’C’ dies without being married to ‘B’. The contract becomes void.

2. Contingent contract upon the non happening of a future uncertain event : 

When the happening of such event becomes impossible it becomes enforced and when such event has possible it becomes void.
EX: “A” agrees to sell his car to “B” if “C” dies. The contract cannot be enforced as long as “C” is alive

3. Contingent contract upon happening of an event within a specified time :
 
When such event has happened within the specified time it can be enforced and if the happening of such event becomes impossible within the
specified time it becomes void.
EX: ‘A’ agrees to pay ‘B’ a sum of money if ‘B’ marries ‘C’,’C’ marries ‘D’. The marriage of ‘B’ to ‘C’ must be considered impossible now,
although it is possible that ‘D’ may die and that ‘C’ may afterwards marry ‘B’.

4. Contingent contract upon non happening of an event within a specified time :

 When the happening of such event becomes impossible within the specified time it can be enforced and if the happening of such event has
happened within the specified time it becomes void.
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 a
year, and becomes void if the ship is burnt within the year.

5. Contingent contract upon impossible events : 
Such an agreement cannot be enforced since it is void. Whether the impossibility of the event was known to the parties or not is immaterial.
EX: ‘A’ agrees to pay ‘B’ Rs 1000/- if ‘B’ will marry A’s daughter, ‘X’. ‘X’ was dead at the time of the agreement. The agreement is void.

6. Contingent contract upon future conduct of a living person:
 When such person acts in the manner as desired in the contract it can be enforced and if such person does not acts in the manner as desired in
the contract it becomes void.

TYPES OF CONTINGENT CONTRACTS

Contracts contingent upon the occurrence of an uncertain event :
These contracts become valid only if the uncertain event mentioned in the contract occurs. For instance, let’s say A and B enter into a contract
wherein A promises to sell his goods in transit to B provided the goods safely reach the harbor. Since, the sale of goods by A is dependent upon
a condition (that the goods reach the harbor), this is a contingent contract. If the ship does not make it to the harbor, the contract becomes void.
Contracts contingent upon the non-occurrence of an uncertain event :
Sometimes, a contingent contract may depend upon the nonoccurrence of an uncertain event. For example, if A promises to sell his goods in
transit to B if the ship carrying the goods does not come back, then the contract becomes valid if the ship sinks in the sea; if it safely reaches the
harbor, the contract becomes void.
Contracts contingent upon the occurrence of an uncertain event within a specified timeframe :
In these contracts, the event must occur within the period specified in the contract. For example, A promises to sell the goods in transit to B, if
the ship carrying the goods safely arrives the harbor within eight days. If the ship comes on the ninth day or anytime thereafter, the contract
becomes void.
Contracts contingent upon the nonoccurrence of an uncertain event within a specified timeframe :
For example, let’s say, A contracts to sell the goods in transit to B if the ship carrying the goods does not reach the harbor within eight days.
Then, the contract becomes void if the ship arrives on the sixth day or anytime before eight days. On the other hand, if the ship does not come
until eight days, the contract becomes valid; it does not matter whether or not it comes or does not come after the eighth day has passed.
Contracts contingent upon an impossible event :

If the performance of a contract is dependent upon an impossible event, such a contract is ab initio void, i.e., void right from the beginning. For
example, A promises to pay B $7,000 if B marries C, who died five years back. Now, since C is already dead, it’s not possible for B to marry
her. So, the contract becomes null and void.

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