What is a contingent contract? When is it enforceable? 'A' agrees to pay 'B' Rs. 10,000/- if 'B' repairs his car. Is this a contingent contract? Explain with the help of legal provisions and decided cases.

Question: What is a contingent contract? When is it enforceable? A agrees to pay ‘B’ Rs. 10,000/- if ‘B’ repairs his car. Is this a contingent contract? Explain with the help of legal provisions and decided cases. [HPJS 2018]

Find the answer to the mains question only on Legal Bites. [What is a contingent contract? When is it enforceable? ‘A’ agrees to pay ‘B’ Rs. 10,000/- if ‘B’ repairs his car. Is this a contingent contract? Explain with the help of legal provisions and decided cases.]

Answer

A contract may be absolute or contingent. An Absolute contract is one where the promisor undertakes to perform the contract in any event without any condition.

Section 31 of The Indian Contract Act,1872 defines a contingent contract as “a contract to do or not to do something, if some event collateral to such contract, does or does not happen”. Contracts of insurance are of this class.

Example: ‘A’ contracts to pay ‘B’ Rs. 1,00,000/- if B’s house is destroyed by fire. This is a contingent contract.

Essentials of a Contingent Contract

1. The performance of a contingent contract is made dependent upon the happening or non-happening of some event. A contract may be subject to a condition precedent or subsequent.
2. The event on which the performance is made to depend is event collateral to the contract, i.e., it does not form part of the reciprocal promises which constitute the contract. Thus the event should neither be a performance promised, nor the consideration for a promise. For example.

   (a) where ‘A’ agrees to deliver 100 bags of wheat and ‘B’ agrees to pay the price only afterwards, the contract is a conditional contract and not contingent; because the event on which B’s obligation is made to depend is part of the promise itself and not a collateral event.
   (b) Similarly, where ‘A’ promises to pay ‘B’ Rs. 1,00,000/- if he marries ‘C’, it is not a contingent contract.

3. The contingent event should not be the mere will of the promisor. For instance, if ‘A’ promises to pay ‘B’ Rs.10,000/- if he so chose, it is not a contingent contract. (In fact, it is not a contract at all). However, where the event is within the promisor’s will but not merely his will, it may be a contingent contract. For example, if ‘A’ promises to pay ‘B’ Rs 10,000/- if ‘A’ left Delhi for Bombay on a particular day, it is a contingent contract, because going to Bombay is an event no doubt within A’s will, but is not merely his will.

Rules relating to enforcement

The enforcement of a contingent contract has been dealt with in The Indian Contract Act,1872 from Section 32 to 36.

1. Enforcement of contracts contingent on an event ‘happening’ (section 31): Where a contingent contract is made to do or not to do anything if an uncertain future event happens, it cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void.
2. Enforcement of contracts contingent on an event ‘not-happening’ (Section 32): Where a contingent contract is made to do or not do anything if an uncertain future event does not happen, it can be enforced only when the happening of that event becomes impossible and not before.
3. When shall an event on which contract is contingent be deemed impossible if it is the ‘future conduct of a living person’ (Section 33): Suppose, the future event on which a contract is contingent is the way in which a person will act at an unspecified time. In such a case, the event shall be considered to have 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.

For instance, ‘A’ agrees to pay ‘B’ a sum of money if ‘A’ marries ‘C’, ‘C’ marries ‘D’. The marriage, of ‘A’ to ‘C’, is now to be considered impossible, although it is possible that ‘D’ may die and that ‘C’ may afterward marry ‘A’.

4. Contracts contingent on happening of ‘specified event within the fixed time’ (Section 34): Contracts contingent upon the happening of an uncertain specified event within the fixed time, becomes void if, at the expiration of the time fixed such event has not happened, or if, before the time fixed, such event becomes impossible.
5. Contract contingent on a specified event not happening within a ‘fixed time’ (Section 35): Contract contingent upon happening or non-happening of a specified event within a fixed time may be enforced when the time fixed has expired and such event has not happened or before the time fixed, if it becomes certain that such event will not happen.
6. Agreement contingent on an ‘impossible event’ (Section 36): A contingent agreement to do or not to do anything, if an impossible event happens, is void. The impossibility of the event may be or may not be known to the parties to the agreement at the time when they entered into it. For example, ‘X’ agrees to pay ‘Y’ Rs 1,000/- if two straight lines should enclose a space. The agreement is void.

In the present case, where ‘A’ agrees to pay ‘B’ Rs. 10,000/- if ‘B’ repairs his car, the contingent event is at the mere will of the promisor. The moment ‘B’ agrees to the offer of ‘A’ to repair the car, the agreement is complete and it doesn’t remain a contingent contract.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X