CONTINGENT

CONTRACT
 An Absolute contract
A contract may be
A Contingent Contract
Absolute Contract: An absolute Contract is one which the promisor binds
himself to performance in any event with out conditions.

Contingent means that which is dependent on something else.

Contingent Contract: (Sec.31) “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”

Contracts to pay Rs.10,000 if B’s house burnt

Ex: A B

This is Contingent Contract.

 Characteristics of Contingent Contract

1. The performance of the contract depends upon the

happening or non- happening of an event in future
2. The event must be uncertain
3. The uncertain event must be collateral or incidental to
the contract
 ESSENTIALS/RULES
1) Contracts contingent on the happening of an event
Contingent contracts depends on the happening of an uncertain
future event cannot be enforced until the event has happened.
Ex: Sam makes a contract with Tom to sell a horse to Tom at a
specified price, if Jack ,to whom the horse has been offered ,refuses
to buy it. Thus the contract cannot be enforced unless & until Jack
refuses to buy.
If the event becomes impossible ,such contracts become void (Sec 32)
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) Contract depends upon the non-happening of event:
Section 33 provides contingent contracts to do or not to
do anything if any uncertain future event does not
happen can be enforced when the happening of the
event becomes impossible and not before
Ex: Rohit agrees to pay Nikhil a sum of money if a
certain ship does not return. The ship is sunk The
contract can only be enforced when the ship sinks and
not before.
Ex: A agrees to sell his car to B if C dies. The contract
3)When contingency is the “future conduct of a living person”
According to section 34, if the future contingent event consists of how a
person will act at an unspecified time, that event shall be considered to
have become impossible if such person does anything which renders it
impossible that he should so act within any definite time or otherwise
than under further contingencies
• The Contract Becomes Void when such person does anything to make
the event impossible
Ex: Mahi agrees to pay Sanjay a sum of money if Sanjay marries Neha.
Neha marries Raj. The marriage of Sanjay to Neha must now be
considered impossible although it is possible that Raj may die and Neha
may afterwards marry Sanjay.
4)a) Contracts contingent on an event happening within the fixed time:
Contingent contracts to do or not to do anything if a future
uncertain event happens within a fixed time. Such a contract is
void if the event does not happen and the time lapses. It is also
void if before the time fixed, the happening of the event becomes
impossible.[Section 35(para 1)]
Ex: X promises to pay Y a sum of money if a certain ship returns
before 1st April 2019. The contracts may be enforced if the ship
returns within the fixed time. On the other hand, becomes void
if the ship sinks.
Ex: Ramesh promises to pay Suresh a certain sum of
money if Train will arrive at its scheduled time . The
contract may be enforced if train arrives at correct time,
and becomes void if the train get delayed or doesn’t
arrived at all.
4)b) Contracts contingent on an event not happening within the
fixed time:
Contingent contract to do or not to do anything if an uncertain
event does not happen within a fixed time may be enforced by
law when the fixed time has expired, and such event has not
happened, or before the time fixed has expired, if it becomes
certain that such event will not happen.[Section 35(para 2)]
Ex: X promises to pay Y a sum of money if a certain ship does
not return before 31st March 2019. The contract may be enforced
if the ship does not return before 31st March 2019. Also, if the
ship burnt before the given time, the contract is enforced by law
5) Contingent agreements to do or not to do anything, if
an impossible event happens, are void, whether or not
the fact is known to parties (Section 36).
Ex: Gowri agrees to pay Rs 1000 to Moksh if two straight
line should enclose a space. The agreement is void.
Ex: Ram agree to pay Rs. 2000 to Mani if Mani will
marry Ram’s daughter Swetha. Swetha was dead at the
time of agreement. The agreement is void.
CONTINGENT CONTRACT AND WAGERING AGREEMENT
contingent contract and a wagering agreement:
The following are the points of difference between a contingent contract and a wagering
agreement:
1. A wagering agreement consists of reciprocal promises. The performance of promise by
each party depends on the happening of an uncertain event. A contingent contract may
not consist of reciprocal promises.
2. Every wagering agreement is of a contingent nature while every contingent contract is
not a wagering nature.
3. In case of a wagering agreement the parties to the agreement have no other interest in
the subject-matter of the agreement except for the winning or losing of the wagering sum.
But in a contingent contract parties do have some other interest in the subject-matter.
In the absence of such an interest a contingent contract would be of a wagering nature.
For example, if A who does not have any interest in the house of B, gets it insured,
it is a wagering agreement. But if A has insurable interest in B's house (e.g., he has lent
money on the mortgage of the house), and gets it insured, it will be a contingent contract
and will be perfectly valid.
4. In a wagering agreement, the future event is the sole determining factor while in a
contingent contract, the future event is only collateral. For example, if A makes a table for
B and B says to him that it will not be approved by Cif C approves it, he (B) will pay a
sum of Rs. 200 for it. A replies that in case C does not approve it, he will give it free of
charge to him (B). This is a wagering agreement. But in case A agrees to sell the table to
B for Rs. 200 if C approves it, the contract will be taken as a contingent contract.
5. A wagering agreement is absolutely void while a contingent contract is perfectly valid.
WAGERING CONTRACT
If there is an agreement between P and Y that if Team Blue beats Team Yellow, Y will
give an amount of Rs.1,000 to P. In case Team Yellow wins, Y will receive Rs. 500 by
P. Such an agreement is considered a wagering agreement in the eyes of law and thus
void.