Ch # 5.

Contingent Contracts Page 30

Contingent contract25
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.

The following are the characteristics of contingent contracts:

§ It depends upon the happening or non-happening of some future event.
§ Event must be collateral to the contract
§ Event must be uncertain

Difference between contingent contract and wagering agreement

Contingent contract Wagering agreement

Validity It is a valid contract. It is void and illegal.
Interest of Parties have real interest in the Parties are not interested in occurrence
parties occurrence or non-occurrence of or non-occurrence of the event except
the event for the winning or losing the amount.
Uncertain The future uncertain event is The uncertain event is sole determining
event merely collateral. factor of the agreement.
Reciprocal It consists of reciprocal promises. It may or may not consist of reciprocal
promises promises.

Rules regarding contingent contracts

Contingent on When enforceable When void

Happening of uncertain future event
- No Time Fixed If the event happens. If event becomes impossible.
- Time Fixed If event happens within time fixed. If time expires or event becomes
impossible before time expires.
Non-happening of uncertain future event
- No Time Fixed If the event becomes impossible. If the event happens.
- Time Fixed If time expires or event becomes If the event happens within time
impossible before time expires. fixed.
Happening of Such agreements are void whether the impossibility of event is known
impossible event or not to the parties to the agreement at the time when it is made.
Future conduct If the future event is the way in which a person will act at an unspecified
of a person 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.