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AMITY UNIVERSITY
LUCKNOW CAMPUS

Amity Law School

TOPIC: CONTINGENT CONTRACTS AND QUASI CONTRACTS

Submitted to: Ms. Ekta Rose Submitted by: Tanya Singh

Assistant Professor Enrollment no. :A8156121015
LLB- 3yrs
Semester-1
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INDEX
ACKNOWLEDGEMENT 3
CH-1 CONTINGENT CONTRACTS 4-12
CH-2 QUASI CONTRACTS 13-20
WORK CITED 21
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ACKNOWLEDGEMENT

I would like to express my gratitude to Asst. Prof. Ekta Rose ma’am who gave me the
opportunity to do this project. I am highly indebted to Amity Law School for their guidance
and constant supervision as well as providing information regarding the project and their
support in helping me complete the project
[Tanya Singh]
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CH- 1 CONTINGENT CONTRACT

INTRODUCTION
A contract is an agreement enforceable by law. [Section 2(h) of The Indian Contract Act, 1872].
For every contract, there should be an agreement that is made by the free consent of parties
competent to contract, for lawful consideration and with a lawful object. The agreement should
not be declared void hereby to form a contract. This definition of contracts as per Indian
Contract Act, 1872 is based on Sir Pollock’s definition which states that every agreement and
promise enforceable at law is a contract. Thus, for the formation of a contract, there must be
an agreement and something in addition to that, i.e., an agreement, and its enforceability at law.
[i]
The word contingent ordinarily means ‘subject to chance.’ In the Indian Contract Act, 1872,
this word has been used to mean conditional, just the way we use it. Uncertainty is the hallmark
of the future. Estimating the chances of an uncertainty becoming certain, calculating the results
if the event does not happen and then measuring the potentiality to deal with its consequences
are all about contingent contracts. Parties may stipulate that performance of obligations under
a contract is dependent on a contingency, even though the contract is validly formed. [ii] The
parties agreeing to the conditions agree that the rights will be enforced, and the obligations will
be due on the happening of the contingency on the contracting of a valid contract.
Section 31 to 36 of The Indian Contract Act, 1872 deal with this type of contract

PERFORMANCE OF CONTIGENT CONTRACTS

DEFINITON
The eexpression “ contigent contracts”is defined under in Section 31 of the contract act:
S.31. “CONTIGENT CONTRACT” Defined - A “contingent contract” is a contract is a
contract to do or not do something, if some event, collateral to such contract does or does not
happen.
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Essentials of Contingent Contracts

1] Depends on happening or non-happening of a certain event
The contract is contingent on the happening or the non-happening of a certain event. These
said events can be precedent or subsequent, this will not matter. Say for example Peter
promises to pay John Rs 5,000 if the Rajdhani Express reaches Delhi on time. This is a
contingent event.

2] The event is collateral to the contract

It is important that the event is not a part of the contract. It cannot be the performance
promised or a consideration for a promise.
Peter enters into a contract with John and promises to deliver 5 television sets to him. John
promises to pay him Rs 75,000 upon delivery. This is NOT a contingent contract since John’s
obligation depends on the event which is a part of the contract (delivery of TV sets) and not a
collateral event.
Peter enters a contract with John and promises to deliver 5 television sets to him if Brazil
wins the FIFA World Cup provided John pays him Rs 25,000 before the World Cup kicks-
off. This is a contingent contract since Peter’s obligation arises only when Brazil wins the
Cup which is a collateral event.

3] The event should not be a mere will of the promisor

The event cannot be a wish of the promisor. Say for example Peter promises to pay John Rs
5,000 if Argentina wins the FIFA World Cup provided, he wants to. This is NOT a
contingent contract. This is not a contract at all.
Peter promises to pay John Rs 50,000 if he leaves Mumbai for Dubai on August 30, 2018.
This is a contingent contract. Going to Dubai can be within John’s will but it is not merely his
will.

4] The event should be uncertain

If the event is sure to happen, then the contract is due to be performed. This is not a
contingent contract. The event should be uncertain.
Peter promises to pay John Rs 500 if it rains in Mumbai in the month of July 2018. This is
not a contingent contract because in July rains are a certainty in Mumbai
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Features of Contingent Contract

1. It is an obligation enforced by law upon the party for the benefit of another
party, even when there is no contract between the two.
2. The outcome of such obligations is like those resulting out of a regular
contract.
3. Such contracts do not arise from an agreement, they are imposed by law.
4. The foundation of a quasi-contract is the duty of a party and not the promise
of the party.
5. Right under such a contract is always the right to the money and in most
cases, but not every time, to a liquidated sum of money.
6. Right is entitled to the party against the specific person only and not against
the entire world.
7. The party may file a suit for breach using the same process as in the case of
an ordinary contract.
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The Contrast
Contingent contracts form an especially important part of The Indian Contract Act, 1872. These
contracts have certain elements in them which make them different from every other type of
contract.

Contingent Contract and Agreements Subject to Contract

There is a significant difference between these two contracts. An agreement subjected to
contract is not a contract at all. In this case, the parties agree not to be bound to contract until
and unless a formal contract is executed, which takes place only at the will of the parties. A
contract is formed only in the event of an uncertain event. On the other hand, a contingent
contract is something different. Contingent contracts suspend performance till the happening
of an uncertain and futuristic event. [x]Agreements subjected to contract negate the very
existence of a contract. A contract with B to pay a sum of 10000 rupees for his house burns
down is a contingent contact. On the other hand, A agreeing with B to form a contract once his
house burns down is an agreement subject to contract. This is the major difference between a
contingent contract and an agreement which is subject to contract.

Contingent Contract and Agreements by Way of Wager

There is a huge difference between wagering and contingent contract. The biggest difference
being, a contingent contact is a valid contract, but a wagering contract is absolutely void. [xi]
A wagering agreement is a promise to give money or money’s worth upon the determination
or ascertainment of an uncertain event. [xii] In these, the parties are not interested in the
occurrence and non-occurrence of the event. There must be determination of the event as the
sole condition of the contract. One party losing and the other party losing on the happening of
the event is the major criteria here. On the other hand, in contingent contract, the major factor
is the happening or not happening itself and it is not about winning or losing money or its
worth. Wagering is looked upon as an existing evil of society. In the case of Badridas Kothari
vs Meghraj Kothari[xiii] The plaintiff’s pleading was that on the 5th of January 1956 he lent
and advanced a sum of Rs. 775 for business purposes and the defendant acknowledged the sum
in writing agreeing to pay interest at -/4/- annas per cent per month. The plaintiff based his
claim on a promissory note or hand-note dated 5th January 1956. The defense was that the
plaintiff and the defendant were speculators in the share market, the plaintiff incurred some
losses in the share business on account of the laches of the defendant and therefore the
defendant executed the Promissory Note. This defense was based on the allegation that the
transaction between the plaintiff and the defendant was fatka or share speculation business and
was a wagering contract. The court believed the plaintiff to be true and the payment slip given
by the defendant as fraud but the fact that it was regarding fatkas, the contract was set void.
This is a case law regarding wagering. This distinguishes a contingent contract from an
agreement made by way of wager.
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Contingent Contract and Agreement to Do Impossible Act

An agreement to do an impossible act, either when the impossibility is inherent or is in the very
nature of the agreement, is not a contingent contract. If a man agrees to pay some money to
another man if he makes a dead person alive, it is not a contingent contract, and the contract is
void. A contingent contract presupposes the prospect of either the happening or non-happening
of an event and not the impossibility of the happening and non-happening of the event. [xiv]
Entering into an agreement whose event has no possibility of occurring is as good as not
entering into any contract. Contingent contracts are to do or not to do something on the
happening or non- happening of an event. If a contingent contract is formed for an event which
is impossible to occur, the contract becomes void. If A promises to pay B if he he marries his
daughter C, the daughter being dead 3 years ago, there is no contract. The event to be performed
is not at all possible. A contingent contract can be the promise to pay money if a person wins
litigation. A promise to pay money if a person draws two straight lines in an enclosed space is
an agreement to do ‘impossible act’ and void. We can thus clearly see how different these two
agreements. The possibility of an event is the most important aspect of a contingent contract
and the agreement to do impossible acts negates this feature of a contingent contract.

Conditions When a Contingent Contract Can Be Enforced

There are certain conditions under which an event can be fulfilled. These are some rules which
must be followed for a contingent contract to be enforceable.
On The Happening of an Event
Section 32 of The Indian Contract Act, 1872 provides that contingent contracts to do or not to
do anything of an uncertain future event happen cannot be enforced by law unless and until
that event has happened. For instance, if X makes a contract with Y to buy Y’s horse if X
survives Y. this contract cannot be enforced by law unless and until Y dies in X’s lifetime. In
the case of Bashir Ahmed & others vs Government of Andhra Pradesh[xv], the respondent
contracted to purchase a book of medical prescriptions to start a company for the manufacture
and sale of Unani Medicines. The book was taken into possession after part payment but the
purpose of taking the book could not be fulfilled. The appellant filed a suit to recover the
balance amount. The defense was that the contingent event of forming a company was not yet
fulfilled. The court rejected this contention and held that the contract was not contingent on the
event of the formation of the medical company. This case law is a good example as to
differentiating the event and making a contract enforceable only after the occurrence of the
event. The enforcement of the contract is envisaged when, primarily, the contract is contingent
on the happening of an event. If it is not contingent on an event, it is not enforceable.[xvi]
Therefore, for any contingent contract to be contingent, the event must occur before fulfillment
of the conditions of the performance of the contract.
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On The Event Not Happening

Section 33 of The Indian Contract Act, 1872 clearly states that:
“ Contingent contracts to do or not to do anything if an uncertain future event does not happen,
can be enforced when the happening of the event becomes impossible, and not before.”
If a person promises to pay another a sum of money If a ship does not return, he will be obliged
to pay only and only after the possibility of the ship returning becomes impossible. In this
illustration, if the ship sinks, the possibility of it returning becomes nil. Thus, the contract must
be enforced. The person must pay money and he cannot wait with the hope of the ship returning.
In the case of Frost vs Knight, [xvii] the defendant promised to marry the plaintiff on the death
of her father. While the father was still alive, he married another woman and thus, it was held
that there was no chance left that the defendant would marry the plaintiff. Thus, she was entitled
to sue him. As soon as the man married another woman, it was sure that the event of the
marriage of the plaintiff and the defendant would not occur. Thus, the plaintiff had the right to
sue him.

On The Event Not Happening Within A Specified Time

Section 35 of the Act states 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, and such event has not happened, or,
before the time has expired, if it becomes certain that such event will not happen. [xviii] If X
promises Y 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.

Situations When a Contingent Becomes Void

The Event Being Impossible
If X contracts to pay Y if Y marries Z and Z dies without being married to Y, the contract
becomes void. A contingent contract will become void if the future uncertain event becomes
impossible to occur. Section 32 of the act states that:
“If the event becomes impossible, such contracts become void.”
The Doctrine of Frustration or impossibility of performance can be discussed here but in India,
principles and theories related to it are not applicable. [xix] In the case of Satyabrata vs
Mugneeram,[xx] An integral part of a development scheme for an extensive area of land was
started by the defendant company. It entered a contract with the plaintiff’s predecessor for the
sale of a plot of land to the latter accepting a small sum of money as earnest. It undertook to
construct roads and drains, and the conveyance was to be completed soon after the completion
of tile roads on payment of the balance of the price. As a considerable portion of the area
comprised in the scheme was requisitioned by the Government for military Purposes in 1941,
the company wrote to the defendant that the road construction could not be taken up for an
indefinite period and required him to treat the agreement as cancelled and receive back his
earnest. It was held that having regard to the nature and terms of the contract, the actual
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existence of war condition at the time when it was entered into the extent of the work involved
in the scheme fixing no time limit in the agreement for the construction of the roads etc., and
the fact that the order of requisition was in its very nature of a temporary character, the
requisition did not affect the fundamental basis of the contract nor did the performance of the
contract become illegal by reason of the requisition, and the contract had not therefore become
impossible.
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Non-Happening OF Event Within Fixed Time

Section 35 of The Indian Contract Act, 1872 states that:
Contingent contracts to do or not to do anything is a specified uncertain event that happens
within a fixed time becomes void if, at the expiration of the time fixed, such event has not
happened, or if, before the time fixed, such an event becomes impossible. If a man promises to
pay another man some money if a ship does not return within a year, the contract becomes void
if the ship is burnt or sinks within that year.
Agreements Contingent on Impossible Events
Section 36 of the act clearly states that:
Contingent agreements to do or not to do anything if an impossible event happens are void,
whether the impossibility of the event is known to the parties to the agreement at the time when
it is made. If X agrees to pay Y 1000 rupees if Y will marry X’s daughter but at the time of the
agreement, the daughter was dead. Thus, this contract is void.
Conduct Of a Living Person[Xxi]
Section 34 of The Indian Contract Act states that:
“When event on which contract is contingent to be deemed impossible, if it is the future conduct
of a living person.”
If the future event on which 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.[xxii] If X agrees to pay Y a sum of money if Y
marries Z. Z marries K. the marriage of Y to Z is considered to be impossible although it may
be possible that K may die later, making the marriage of Y to Z possible. If the event is the
future conduct of a person living, the event is deemed impossible if that person does anything
which makes it impossible. The impossibility is only for the time-being and the prospect of the
event becoming possible due to the future conduct of that person in certain future
contingencies, is to no avail.
Thus, these are the conditions when a contingent contract can become void, and it cannot be
enforced.
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Conclusion
A contract is an agreement enforceable by law. For every contract, there should be an
agreement which is made by the free consent of parties competent to contract, for lawful
consideration and with a lawful object. The agreement should not be declared void hereby to
form a contract. Every contingent contract is a contract primarily. Like any other contract, it is
also a contract to do or not to do something. It is not, however, an absolute and unconditional
one, without any reservations or conditions, which is to be performed under any event. Its
performance is dependent on some event’s happening or not happening- the contingency.
For a contract to be a contingent contract, certain essential elements must be there. These
elements form a contingent contract and without them, a contract will not be contingent. There
must be a valid contract to do or not to do something. The performance of the contract must be
conditional. The said event must be collateral to such contracts and the event should not be at
the discretion of the promisor. These are some rules that must be followed for a contingent
contract to be enforceable. For instance, at the event, at the event not happening and, at the
event, not happening within a specified time. There are some situations when a contingent
contract becomes void. Some of them are the event being impossible, not happening of event
within fixed time, agreements contingent on impossible events and on the conduct of a living
person.
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CH –2 QUASI CONTRACTS
DEFINITION
A voluntary act from which derives obligations subject to a regime close to the contractual
one imposing on the author of the act and a third party, not bound by the contract. Quasi
contract deals with rights or liabilities arise from relations resembling those created by
contract. It is not a real contract and thus called a non-consensual contract based on an
agreement of parties.

Quasi contracts are based on the principle of equity and justice and prevent enrichment of one
person at the cost of another. It is a contract where there is no intention either side to make a
contract, but the law imposes a contract. Contracts implied in the law are merely remedies
granted by the court to enforce equitable or moral obligations despite the lack of assent of the
party to be charged.

Quasi-contracts are made possible by the application of the doctrine of Quantum Meruit that
is what one has earned or deserved on implied assumption.
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The Principle of Unjust Enrichment

When a person has been unfairly benefitted at the expense of the other person it is called unjust
enrichment. The doctrine of unjust enrichment was based on English Law. In cases related to
unjust enrichment, the court directs the unfairly benefitted person to give back all the benefits
which he/she acquired unfairly or to give compensation. The defendant is obliged by natural
justice and equity to pay back the money.
In Moses v. Mc Farlon[1], it was held that defendant is obliged by the principle of natural
justice and equity to refund the money which he/she has unjustly gained. Further, the implied
contract theory were taken in India in the 1860s in the case of Rambux Chittangeo v.
Modhoosoodun Paul Chawdhry[2], it was held in this case with reference to Pothier and Austin
jurisprudence that a claim for contribution from a co surety was not a contractual claim, that
the use of the language of implied contracts was something forced on the common law by the
purely fortuitous fact that the remedy was framed in the assupsit and the system like India was
not dependent on the forms of action could profitably abandon all the talks of implied contracts.

Illustrations
“A” hires an interior designer, “B,” for decorating his/her house. “A” terminates the contract
prematurely due to a breach and till that time only a few rooms were decorated. “A” refuse to
pay “B” for the work which was already done by him. “A” was unjustly enriched.
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Features of a Quasi-Contract
• Their origin does not lie in the offer and its acceptance, that is, in an agreement between
the parties.
• They are based on justice, equity, and a good conscience and on the principles of natural
justice.

Section 68 (Claim for necessaries supplied to person incapable of contracting,

or on his account)
If the “necessaries” for a person, who is incapable of contracting (for example, a minor or a
mentally disabled person) or of the dependents of such a person are taken care of by someone,
he has the right to be reimbursed from the property of such incapable person. Although the
word “necessaries” has not specifically been defined in the Act, it is impliedly clear that it
means the necessaries to sustain life, basic things like food, clothing, education, etc. These are
things without which a person cannot exist. In simple terms, if a person A supplies another
person B (who is incapable of entering into a contract) or his family or anybody else who is
dependent on him, with necessaries for life, he is entitled to take his due return from the
property of person B. He is entitled only to such a reasonable amount as the value of the goods
or services he may have supplied hold.

Section 69 (Reimbursement of person paying money due by another, in

payment of which he is interested)
A person who is interested in the payment of money which another is bound by law to pay,
and who therefore pays it, is entitled to be reimbursed by the other.
If a person A pays something in someone’s (a person B’s) place, that which person B is himself
‘bound by law’ to pay, A will be reimbursed by B. Please note that the person A should be
‘interested’ in this payment. It is a case of implied indemnity.
For instance, Joe is a Zamindar. Annie holds one of his lands on lease in Punjab. The revenue
of Joe’s land is payable to the government in arrears. So, the land ends up being advertised for
sale by the government. According to Revenue Law, if the land is sold, it will end Annie’s
lease. To prevent this sale, Annie pays Joe’s dues to the government. Joe is bound to pay back
to Annie.

The illustration satisfies the following conditions-

• The party paying the other party’s dues is interested in the payment.
• The party whose payment is due was in fact bound by law to pay.
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Section 70 (Obligation of person enjoying the benefit of the non-gratuitous

act)
When a person lawfully does something for another person (for example, delivers a good or a
service) without intending to do so ‘gratuitously,’ and the other person enjoys the benefit of
the delivery of that good or service, the latter is bound to make compensation to the former in
respect of, or to restore, the thing so done or delivered.
A gratuitous act is one that is done for a person by another without the expectation of a return.
For example, giving someone a gift is a gratuitous act. Here comes your Amazon package
delivered to the wrong address. A pack of chocolate chip cookies that you ate as soon as they
arrived. You are liable to compensate the actual owner of the package.
The illustration of a shoe shiner unsolicitedly polishing one’s shoes or that of the coolie picking
up one’s goods will lie under Section 70. Such acts and services are not done gratuitously and
therefore a liability to pay back arises on the part of the person on the receiving end.

Section 71 (Responsibility of finder of goods)

Simply, a person who finds goods that belong to another person shall be treated as a bailee. A
bailee is a safe keeper of the goods, who is supposed to return the goods to the actual owner or
dispose of them in the way the actual owner may want them to. The bailee has certain duties
and rights as the ‘possessor’ or ‘custodian’ of the goods for the time being. For example, Sarah
finds a diamond lying on the floor in a shop. She picks it up and keeps it in her safe possession.
Sarah makes all reasonable efforts to find the true owner of the diamond. The diamond
belonged to Nadia. Sarah has the right to hold possession of the diamond against all the world
except Nadia and is supposed to make reasonable efforts to find her and return it to her. In this
case, Nadia will have to pay compensation for all the loss suffered by Sarah in finding her.
Duties of the finder of goods
• The finder has a duty to take reasonable care.
• He/she has a duty not to use the goods for his personal purposes.
• He/she has a duty not to mix the found goods with his own goods.
• He/she has a duty to make reasonable efforts to find the actual owner of the good s.

Rights of the finder of goods

• Right to Lien– The right to retain the goods found until he receives compensation for all the
expenses suffered in finding the owner.
• Right to Sue– If the owner has announced a reward for whoever finds the good, the finder has
the right to sue the owner for such a reward or retain the goods until he is compensated.
• Right to Sell– The finder of goods has the right to sell the goods in certain specific
circumstances, for example:
i) If the owner could not be found even after reasonable efforts.
ii) If the owner is found but refuses to pay compensation or the lawful charges of the finder.
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iii) If the goods are in immediate danger of perishing if not used. Iv) If the lawful charges of the finder
amount to two-thirds of the value of goods.

Section 72 (Liability of person to whom money is paid or thing delivered by

mistake or under coercion)
As the heading suggests, if something is delivered to a person by ‘mistake’ or under ‘coercion,’
he is liable to pay it back. For instance, Aristotle and Dante share a flat and contribute half of
the rent to be paid. Aristotle, without knowing that Dante has already paid the due rent to the
property owner, pays again to the property owner. The property owner, in this case, is liable to
give back the money delivered to him by mistake. The term mistake here can mean both
mistake of fact and mistake of law.
The section also uses the term ‘coercion’. Here is an example of something delivered under
coercion- A railway company refuses to deliver goods to a certain consignee except upon the
payment of a certain illegal sum of money. The consignee pays the sum to obtain his goods.
The company is liable to return the sum of money illegally charged.
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Difference Between Quasi-Contract and Contract

The contracts are the ones expressed that are approved by the parties under consideration as a
matter of law where they share interests and consequences though specifically expressed
conditions. In contrast, under quasi-contracts, the obligations are enforced by the law enforces
based on the conduct of the parties under consideration to prevent the undue advantage of one
party over the cost of another party.

Difference Between Quasi-Contract and Contingent Contract

Contingent contract is a contract based on happening or non-happening of future or uncertain

events. For example, Mr. X contracts to pay to Mr. Y Rs. 10,000 if Mr. Y's house is burnt.
This is a contingent contract.
The words contingent ordinarily means ‘subject to chance.’ In the Indian Contract Act, 1872,
this word has been used to mean conditional, just the way we use it. Section 31 to 36 of The
Indian Contract Act, 1872 deal with this type of contract. Section 31 of the Act defines
‘contingent contract’ thus:
A contingent contract is a contract to do or not to do something if some event collateral to
such a contract does or does not happen.
Though the Indian contract Act, 1872 does not define quasi contract, it calls them relation
resembling those of contracts. However, a quasi-contract may be defined as, “a transaction in
which there is no contract between the parties; the law creates certain rights and obligation
between them which are like those created by a contract. “An obligation created by law for
the sake of justice; specif., an obligation imposed by law on parties because of relationship
between parties or because one of them would otherwise be unjustly enriched. It is not a
contract, but instead is a remedy that allows the plaintiff to recover a benefit conferred on the
defendant.

Advantages
The advantages are as follows:
• It prevents the undue advantage of one party over the cost of other parties as it is based
on the principle of the Unjust Enrichment.
• It is created by order of the court, so none of the parties involved can attempt to disagree
with such orders. So, all the parties involved are obliged to follow it.

Disadvantages
The Disadvantages are as follows:
• The enriched party will not be held liable in cases where the benefit received by him
was tendered negligently, unnecessarily, and by the miscount.
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• It is created only to the extent it was necessary for preventing unjust enrichment, and
the plaintiff must forgo all the expected profit which he would have earned if there
exists a whole expressed agreement between the parties involved.
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Conclusion
A contract has certain elements, like the offer, and its acceptance, that give rise to an agreement.
The agreement, if it is legally enforceable, becomes a contract, that is, it can be taken care of
in a court of law if it is not performed by either of the parties involved. Yet, there are certain
situations where even in the absence of an ‘agreement’ as such, one or the other party is obliged
to perform something. Such obligations are called quasi-contractual obligations. Chapter V of
the Indian Contract Act, 1872 deals with such obligations.
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WORK CITED
•CONTRACT AND SPECIAL RELIEF – AVATAR SINGH
•LEGALSERVICES INDIA.COM