Contingent Contract | Regarding Rules || Short Note

A contingent contract can be defined as a conditional contract. Such a contract depends on a future uncertain event. 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. An example of a contingent contract is the Insurance contract. A contract to pay Rs. 1000000 if X’s death. But the expiry of a fixed time, can not be a contingent contract, because these events are of certain nature.

 

Rules Regarding Contingent Contract.

i) On the happening of a future uncertain event:

A contract to do or not to do something, if an uncertain future event happens, can not be enforced by law unless until the event has happened. If the ground event becomes impossible that the contract becomes void.

ii) On the non happening of a future uncertain event:

The contingent contract is to be performed if a particular event does not happen, its performance can be enforced when the happening of that event becomes impossible. For example, A agrees to pay a certain sum of money if a ship does not return to port. The ship returns back. The contract becomes void. Rather the ship sinks in the sea, now the ship could not return forever, the contract is enforceable.

 

iii) On the event linked with human conduct, or demand impossible:

A contract contingent on the act or conduct of specified man if that thing becomes impossible by his denial or inability, can no create any liability. For example, A agrees to pay B a certain sum of money. If B constructs the house and is certified by Y an engineer, here certification of the house by Y is a contingent event. The liability is not created because the house is not certified by Y.

 

iv) On the event’s happening within a fixed time:

A contract contingent upon the happening of an event within a fixed time becomes void. If the event becomes impossible. For example, A agree to purchase a certain amount of goods if A’s ship comes within one month. Now the ship has not returned within that time. The contract becomes void.

 

v) if the contract depends upon the future uncertain event if that does not happen within the fixed time, the contract may be enforced.

vi) If the future event is illegal or certain the contract becomes void.

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