By – Vanshika Dhiman, BBALLB, 2nd Year Student, Amity Law School, Amity University, Gurugram
A contingent contract is a contract that depends on the occurrence or non-occurrence of a future event that is not directly related to the contract. The contract will only be performed if a certain event happens or doesn’t happen.
Example: A agrees to pay B ₹10,000 if B’s ship safely arrives at the port. This is a contingent contract. A’s obligation to pay depends on the event (the ship arriving safely) happening.
If the ship arrives safely, A must pay. If it does not, A does not have to pay.
Essential elements of contingent Contracts
- There must be two persons
- There must be an uncertain future event
- Some control over the event but not absolute control
- Others maybe interested in the contract
- There is no reciprocal promise between the persons
- It must be a valid contract
Conditions of Enforcement of Contingent Contracts
- On the happening of an event – Section 32
It depends on an uncertain future event cannot be enforced until the event actually happens. If the event never happens, the contract cannot be enforced at all.
Example: X agrees to sell his car to Y if Y wins a lottery. Here, the contract depends on Y winning the lottery, which is an uncertain future event. X is not obligated to sell the car unless Y wins the lottery. If Y does win, the contract can be enforced. If Y doesn’t win, the contract cannot be enforced.
- On an event not happening – Section 33
A contingent contract based on something not happening can only be enforced when it becomes certain that the event won’t occur. Until then, the contract cannot be enforced.
Example: A agrees to sell land to B if B’s house does not get destroyed by a flood this year. If the year passes without a flood, it becomes certain that the event (flood) did not happen. Only then can B enforce the contract to buy the land.
- when an event on which contract is contingent to be deemed impossible if it is the future conduct of a living person – Section 34
If a contract depends on how a person will act in the future, the event is considered impossible when the person does something that makes it impossible for them to act as expected within a reasonable time or without more conditions.
Example: A agrees to give B a loan if C sells A his house. If C sells the house to someone else, it becomes impossible for A to get the house from C. Therefore, the event (C selling the house to A) becomes impossible, and the contract cannot be enforced.
- contracts contingent on an event happening within the fixed time – Section 35
A contingent contract that depends on an uncertain event happening within a set time becomes void if the event doesn’t happen by the deadline or if it becomes impossible before that time.
- contracts contingent on an event not happening within the fixed time – Section 35
A contingent contract based on an event not happening within a set time can be enforced once the time has passed and the event didn’t happen, or if it becomes certain before the time runs out that the event won’t happen.
Example: A agrees to sell goods to B if B’s shipment does not arrive within 30 days. If the 30 days pass and the shipment doesn’t arrive, A can enforce the contract. Similarly, if it becomes clear before the 30 days that the shipment won’t arrive (like it’s confirmed lost), A can enforce the contract immediately.
- contract contingent of impossible event void – Section 36
An agreement based on an impossible event is void from the start, whether the parties knew the event was impossible or not.
Example: A agrees to pay B ₹10,000 if B can make a dead person come back to life. Since it’s impossible to bring someone back to life, the contract is void from the beginning, even if A and B didn’t realize it was impossible when they made the agreement.
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