Business Law

Contingent Contracts

Presented to Sir Azeem Farouqi Presented by Esha anwar & Hira Murtaza
 The Contract Law 1872
Contingent Contract, section 31

“Contingent contract is a contract to do or not to do

something, if some event is collateral to such
contract does or does not happen”
Essential of Contingent Contract
• Performance of a contract depends upon the happening or not happening of an event
(future); the enforcement of such a contract solely depends upon the occurrence of that
event that is mentioned. Example; raza will pay shah if the consignment is fulfilled.

• That event must be collateral to such contract; the event mentioned has to part of the
contract.

• Event may be uncertain; certainity of the said event is not guaranteed and
performance is conditional.

• Event cannot be under promisor’s control

Features of a Contingent Contract
● It is time specified; a time limit is mentioned to ensure the performance.
● All the conditions of a contract are mentioned by the promisor and agreed by the
promisee. Nothing is left to surprise. All the points are discussed and agreed upon.
This makes it easier for the parties to manage their expectations at the time of
performance.
● It must be a valid contract. It should have legal standing in the court of law. Must be
enforceable by law.
● Performance is conditional on the happening of the event; performance is not
absolute and so it depends upon the occurrence of the event.
 ● If the event, a contract is
depending upon, becomes
impossible the contract
becomes void.
Exception ● Example: rashid contracts to
pay nurse ramzan money if
section 36
he takes his mother to
umrah, but mother dies
before the time. This
contract becomes void.
Enforcement of a Contingent Contract
Contract contingent to a certain event to be
Contracts contingent to an
deemed impossible, if it depends on the
event happening enforcement
Example: if shahid contracts to sell the actions of a person
property to muneeb for a particular Example: saahil was offered to become partners in a
price, if kashif, to whome the property firm if he marries sana, but saahil marries farzana and
was offered initially, refuses to buy it. so saahil and sana’s marriage becomes impossible. It
This contracts cannot be enforced till might be possible if farzana dies or takes divorce .
kashif refuses the offer of shahid Section 34
Section 34
Section 32 Section 33
Contract contingent to a certain event
Contracts contingent to an
happening at a specified time, becomes
event not happening
void;
enforcement
Example: an insurance policy will pay for house
Example: an insurance company agrees
maintenance if the maintenance claim is made at
to pay 1million to Kaiser if his factory is
the end of year. Owner fails to submit the claim in
destroyed beyong repair. His factory is
due time hence missing the maintenance
burned to the ground. The contract can
insurance for the said year
be enforced now
Advantages of a
Contingent
Contract
• Contingent contracts helps to confine the losses that could
otherwise be huge in case of conditions not fulfilled. This makes
the parties to prefer such a contract.
• It helps to establish trust between the promisor and the
promisee. As both parties are almost at an equal footing.
• Contingent contracts reduces the risks of all the parties
involved. Because the losses are limited to the conditions
agreed.
• Parties can cancel the performance of a contingent contract in
light of happening or not happening of an event.
• Promisor and promisee can negotiate/renegotiate the
conditions before the contract comes to performance. Making it
not absolute.
When Contingent Contracts
becomes Void
• Contingent Contracts become void when the
event upon which they are contingent
becomes impossible to occur.
• The contract is based upon non-happening of
an event at a specified time but later the
event becomes impossible to occur.
• The contract was dependent upon the act of
a party but the party does contrary to it and
now the event becomes not possible
• The contract is based upon the non
occurrence of an event, but the event occurs,
hence the contract becomes void in the eye
of law.
   Contingent Wagering
Contract contract

Difference Validity of
Contract
the Valid Void

between Interests Parties involved in

the
contracts
contingent
have
The parties
involved have no
other interest than

Contingent other interests as

well
to lose or win the
bet

Contract and Nature Always

conditions
have May not
waggering
have

Wagering Collateral
future events
to Future events are Future events are
collateral to such essential to such
contracts contracts

Promise    

Enforcement Can be enforced Have no legal

by law standing in the eye
of law
Thank You
Q & A please?