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Contingent Contract under Indian Contract Act

Contingent Contract under Indian Contract Act

Contingent means when an event or situation is contingent. The situation is dependent on any condition by someone else. For example, payment is contingent on the fulfillment of conditions by someone.

Meaning of Contingent Contract

In the contingent contract, the performance of the contract by the promisor on the fulfillment of certain conditions. This type of contract creates an obligation on the promisor only if the conditions to the contract are met.

Elements of Contingent Contract

  • The contract is to do or not to do something that depends on the happening or not happening of the event.
  • The happening of the event is the collateral of such a contract.
  • The contract cannot be enforced by law until and unless that event has happened.
  • The contingency of the event must depend on the performance of the party to the contract and not on the will of the party.
  • The event should be uncertain then only the contract will be considered as a contingent contract.

Contingent Contract under Indian Contract Act, 1872

Section 31 of the Indian Contract Act, 1872 defines Contingent Contract- 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. – 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.”

Illustration: A contract to pay B Rs.10, 000 if B’s house is burnt. This is a contingent contract. A contract to pay B Rs.10, 000 if B’s house is burnt. This is a contingent contract.”

Provisions of the Enforcement of the Contingent Contract under Indian Contract Act, 1872

Provisions related to enforcement of the contingent contract under the Indian Contract Act, 1872 are provided under section 32 to 36:

Section 32: The contingent contracts abstain from doing something if an uncertain future event happens. The contract cannot be enforced by law unless the event takes place.

Section 33: The contingent contract abstain from doing something if an uncertain future event does not happen can be enforced when the happening of the event is not possible. If the event happens then the contract would not be valid.

Section 34: If the contract contingent depends upon that how a person will act at a future time, the event shall be impossible when such person does anything that makes it impossible for the event to happen.

Section 35: Such contingent contract will be a void contract if the event does not happen within the fixed time or if the happening of the event becomes impossible before the time fixed.

Section 36: The agreement is void if the party was aware of the impossibility of the event.

Difference between Contingent contract and Wagering Contract

  • A wagering contract is not a valid contract but a contingent contract is a valid contract as per law.
  • In a wagering contract, the occurrence or non-occurrence of an event forms the proposition of the contract but in a contingent contract the contingency i.e. happening or not happening of the event is collateral.
  • The parties to the wagering contract do not have any interest in the happening or not happening of the event other than winning or losing the amount. In the contingent contract, parties have an interest in the happening or not happening of the event.

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Written by Hardik Tokas

Hardik Tokas is a law graduate from GGSIPU, Delhi. He is an analytical thinker, an active team player who is proactive in legal research and writing, and has highly motivated enthusiasm for business, start-ups, and entrepreneurship. He has the vision to deliver excellent support to the visionary entrepreneurs and educate them in all legal compliances of applicable laws considering their business level and long term growth. He is a goal-oriented professional and a valuable member of the organization.

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