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LOC Assignment

This document defines and provides an example of a contingent contract. It begins by defining a contingent contract as one where a promisor's performance is dependent on certain conditions being met. An example is given of an employment contract contingent on an applicant passing an entrance exam. The key elements of contingent contracts are discussed, including that the contingent condition must be a future uncertain event outside a promisor's control. Insurance, indemnity, and guarantee contracts are provided as common examples of contingent contracts. The document concludes by restating the learning gained.

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Pratham Bansal
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36 views

LOC Assignment

This document defines and provides an example of a contingent contract. It begins by defining a contingent contract as one where a promisor's performance is dependent on certain conditions being met. An example is given of an employment contract contingent on an applicant passing an entrance exam. The key elements of contingent contracts are discussed, including that the contingent condition must be a future uncertain event outside a promisor's control. Insurance, indemnity, and guarantee contracts are provided as common examples of contingent contracts. The document concludes by restating the learning gained.

Uploaded by

Pratham Bansal
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Fairfield Institute of Management and Technology

What do you mean by contingent contract? Elaborate with eg.

Subject Name: Law of Contract

Subject Code: 103

Submitted to: Submitted by:


Name of Faculty Name: Anushka Teotia
Mr. Mudit Jain Enrollment no.:121211104597
Course: BBALLB
Semester/Section: 1st/A
What is Contingent Contract? Elaborate with an eg.

TABLE OF CONTENTS
CONTENT Page no.
Introduction 03
Definition 03-04
Essentials 05
Rules 06
Eg. 07
Conclusion 08
Bibliography 08
INTRODUCTION

CONTINGENT CONTACT

• DEFINITION
A contract can be entered into by parties for the performance or non-performance of an
action or an event. There are primarily two types of contract: Absolute contracts and
Contingent contracts. Let us write contingent contract in detail.

• CONTINGENT CONTRACT MEANING


In a contingent contract, the performance of the promisor is dependent on the fulfillment of
certain conditions. These contracts create an obligation on promisor only if the conditions
collateral to the contract are met.

• LET US DEFINE CONTINGENT CONTRACT AS PER SECTION 31 OF


THE INDIAN CONTRACT ACT, 1872
According to the Indian Contract Act, “If two or more parties enter into a contract to do or
not do something if an event which is collateral to the contract does or does not happen, then
it is a contingent contract.”
Insurance contract, indemnity contracts, and guarantee contract are some eg. of contingent
contracts.

• WHAT CONSTITUES CONTINGENT CONTRACTS?


There are certain essential elements of a contingent contract as stated under section 31 of the
contract act.
Depends on the occurrence or Non- occurrence of an event
A contingent contract will be deemed valid only if an event occurs or does not occur and it is
collateral to the contract.
Contract Performance must be conditional
The meaning of a contingent contract is that the conditions collateral to the contract must be
certain to happen in the future. The presence of a condition is essential for a contract to be
contingent. Section 32 and section 33 of the contract act state that the enforcement of a
contingent contract is subject to collateral conditions being fulfilled.

Eg.: B agrees to employ C as employee if clears the entrance or more. B is liable to give the
job to C only when he meets condition specified of clearing the entrance with the required
percentage.
The Condition of the Contract must be a future event
A contract will be considered a contingent contract only if the event specified is a future
event that may or may not happen.
The Condition Specified must be Collateral to the Contract
A contingent contract is based on the occurrence or non-occurrence of an event. This event
must be collateral to the contract and not a part of the consideration mentioned in the
contract. The contingency must be an independent event.

Eg.1 : A enters into a contract with B to pay him 10000 rupees on the delivery of some
books. This is not a contingent contract since A has an obligation to pay for an event that is
part of the contract and not collateral.

Eg.1: A enters into a contract with B to pay him 10000 rupees if the books are delivered to
him by Friday. In this case, delivery by Friday is collateral to the contract and not a part of
the consideration. Hence this is a contingent contract.

The Event must not Depend on Mere will of the Promisor


The event must not be influenced only by the will or wish of the promisor.

Eg.: E promises to pay a certain sum to Y if Y leaves for Delhi on 1st June. Going to Delhi is
Y’s will but is not an event completely dependent on his will.
ESSENTIALS OF A CONTINGENT CONTRACT

THERE MUST BE A VALID CONTRACT


The first requirement is that there must be a valid contract between the parties. It
must fulfill all the essential requirements of a valid contract.
The performance of such a contract must depend on happening or non happening of
some future event.

THE EVENT MUST BE COLLATERAL i.e., INCIDENTAL CONTRACT


The event upon which the performance depends should not form part of reciprocal
promises which constitute a contract. The event should be independent or ancillary to
the contract.

THE CONTINGENT EVENT MUST NOT BE AT THE MERE WILL AND


PLEASURE OF THE PROMISOR
For instance, if A promise to pay B rs. 20,000 if he so choose, it is not a contingent
contract [ In fact, it is not a contract at all]

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.
Eg.: Peter promises to pay Rs 500 if it rains in Mumbai in the month of July 2022.
This is not a contingent contract because in July rains are almost a certainty in
Mumbai
RULES REGARDING CONTINGENT CONTRACTS (SECTION
32)

CONTINGENT CONTRACT DEPENDENT ON HAPPENING OF A FUTURE


UNCERTAIN EVENT:
Contingent contract to do or not to do anything, if an uncertain future event happens,
cannot be enforced unless and until that event has happened. If the event becomes
impossible, such contract becomes impossible, such contract becomes voud.
Eg.: A makes a contract with B to buy B’s horse if A survives C. This contract cannot
be enforced unless C dies in A’s life time.

CONTINGENT CONTRACT DEPENDENT ON NON HAPPENING OF A


FUTURE UNCERTAIN EVENT
When a contract is dependent upon the non happening of a future event, it can be
enforced only when that event becomes impossible, and not before.
Eg.: A agrees to pay B a sum of money if a certain ship does not return. The ship is
sunk. The contract can be enforced when the ship sinks.

EVENT LINKED WITH HUMAN CONDUCT


If a contract is contingent as to how a person is contingent as to how a person will act
as an unspecified, 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.

AGREEMENTS CONTINGENT UPON AN IMPOSSIBLE EVENT


Contingent agreements to do or not to do anything if an impossible event happens,
are void, whether the impossibility of the event is known or not known to the parties
to the agreement when it is made.
Insurance contracts, indemnity contracts, and guarantee contracts are some eg. of
contingent contracts.

A promises to pay B a sum of 20 thousand rupees if there is damage to his house


from fire. The payment of the amount is contingent on the house being destroyed by
fire. If there is no fire, B cannot claim the amount from A who is not liable to pay
since the fire that was collateral condition, did not happen.

C promises to pay ten thousand rupees to D if he marries E. In case E marries F, then


the event of D marrying E is rendered impossible. A divorce between E and F or the
death for F is possible later and only, in such a case, the contract will become valid.
Otherwise, the contract becomes void.
CONCLUSION
It was a wonderful and learning for me while working on this project.
This project took me through the various phases of project development and gave me real insight into
the world.

BIBLIOGRAPHY

BOOKS:
WEBSITE: 1)Blog.ipleader.in
2)owlgen.in
3)vedantu.com

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