Contingent Contracts

Group-B3 Salil Shivhare (PGPM811_101) Mayank Agrawal (PGPM811_55) Sippy Taneja (PGPM811_72) Vishal M Aigal (PGPM811_87) Subhadeep Das (PGPM811_75) 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(Sec 31). Illustration: A contract to pay B Rs. 10,000 if B’s house is burnt. This is a contingent contract. A promises to B Rs. 1 crore if a certain ship does not return within a year. Contingent Contract.

Three essential characteristics of Contingent Contract ? Its performance depends upon happening or non-happening of some event in the future ? The event must be uncertain ? The event must be collateral, i. e. incidental to the contract Rules about contingent contract Contingent Contract Enforcements of contracts contingent on happening of a future uncertain event (Sec32): For example : A promises to pay B Rs. 10,000 if A’s ship coming from London reaches at Mumbai-port on or before 31stMay,2012.

Case 1: When the ship reaches at Mumbai-port on or before 31stMay,2012 Valid contract(Enforceable law) Case 2: When the ship reaches at Mumbai port after the specified period i. e. 31stMay,2012 Void/ Unenforceable Case 3: When the ship sinks Void/Unenforceable Rules about contingent contract Contingent Contract Enforcements of contracts contingent on Non-happening of a future uncertain event (Sec33): For example : A promises to pay B Rs. 10,000 if A’s ship coming from London doesn’t reaches at Mumbai-port on or before 31stMay,2012.

Case 1: When the ship reaches at Mumbai-port on or before 31stMay,2012 i. e. , specified period Void Case 2: When the ship reaches at Mumbai port after the specified period i. e. 31stMay,2012 Valid Case 3: When the ship sinks Valid Rules about contingent contract Contingent Contract Contracts contingent on future conduct of a living person (Sec34): Illustration: A agrees to pay B a sum of money if B marries C, C marries D. The marriage of B to C must now be considered impossible although it is possible that D may die and that C may afterwards marry B.

Contracts contingent on a specified event happening within a fixed time: (Sec 33(1)) Illustration: A promises to pay B a sum of money if a certain ship returns within a year. The contract may be enforced if the ship returns within the year, and becomes void if the ship is burnt within the year. Rule about contingent contract Contingent Contract Enforcement of contingent contract on specified event not happening within a fixed time(Sec35(2)): Illustration: A promises to pay B a sum of money if a certain ship does not return within a year.

The contract may be enforced if the ship does not return within the year or is burnt within the year. Agreements contingent on impossible events (Sec 36): Illustration: A agrees to pay B Rs. 1,000 if B will marry A’s daughter C and C was dead at the time of the agreement. The agreement is void. A agrees to pay B 1,000 rupees if two straight lines should enclose a space. Wagering Contract It is agreement by mutual promises each of them conditional on the happening or not happening of an unknown event. All wagers are contingent but all contingent contracts are not wagers. Contingent Vs Wagering.

Basis Reciprocal promises Nature Void or not Interest in subject matter Wagering Contract It consist of reciprocal promises It is essentially of contingent nature It is void Contingent Contract It does not contain reciprocal promises It may not be of wagering nature It is valid Parties have no other The parties have other interest in subject interest also in the matter other than to win subject matter or lose It is purely a game of chance It is not a game of chance, though is dependent upon happening or nonhappening of a certain event It is only collateral to the contract.

Game of chance Future event It is the sole determining factor Contingent Contract-Qs A agrees to pay Rs. 5000 to B, If B’s car is burnt It is a) Void b) Voidable contract c) Wagering contract d) Valid contract A contract of life insurance is a a) Contract of indemnity b) Contingent contract c) Wagering contract d) Uncertain event A contracts to pay Rs. 50,000 to B if B marries C. But C dies Before marriage. Can the contract between A & B enforced? THANK YOU !!!