In this article, you will be able to discover the different concepts related to the Contingent contract and its ability to enforce it. When the parties are done with the different conditions as laid down in section 10 of the Indian Contract, 1872 such as,
- The parties should have the consent, consent in the sense means, in the same thing in the same sense,
- The parties making agreement must be competent to Contract,
- The subject matter of the agreement must be lawful and the consideration should also be lawful,
- And the last is that it should not have been expressly declared to be void.
If all the conditions are fulfilled then all the agreements are termed as a valid Contract under the Indian Contract Act,1872.
After the formation of the valid Contract, the next step is to fulfil the requirement as laid down in the Contract. And to fulfil the object of the parties had in mind while making the contract. And with the fulfilment of the conditions and objectives of the contract, the liability of the parties comes to an end.
Then such a contract is deemed to know as the discharged contract. But to discharge the contract, it is not compulsory that by performance only the contract is said to be discharged. The contract may be discharged by;
- by performance,
- by Imposibility of performance, and
- by Agreement (Ss. 62 to 67)
PERFORMANCE OF CONTINGENT CONTRACT
A contingent contract in simple meaning is a contract that is totally dependent upon the happening or non-happening of an uncertain event. As the elements of the contract to be called a contingent contract are,
- There should be some conditions linked to the performance of such contract,
- There should be Contingency to be collateral to contract, and
- That the contingency to be condition precedent.
If all the above requirements are there in the contract then that contract is called a Contingent Contract.
Under section 31 of the Indian Contract Act, 1872 the term “Contingent Contract” is defined, which reads as
“Contingent contract” defined.
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.
Thus any contract which is made on the future condition of the happening or non-happening of the uncertain event and if that condition is satisfied first and then performance can be demanded is a Contingent Contract.
WHEN ENFORCEMENT DEPEND UPON HAPPENING OF AN EVENT (Ss. 32)
Now if the condition of the contingent contract is that of the happening of some uncertain event that will lead to the performance of the Contract. In other words, a Contingent Contract to do or not to do anything if an uncertain event happens in the future which will lead to the performance of that contract.
for example- A makes a contract with B not to buy B’s bike if C would come to buy the bike.
In the above example, the contingency is that if C will come to buy the bike then A would be free from the performance of the contract between A and B. And if C never came to buy the bike then A will buy the bike.
Section 32 of Indian Contract Act, 1872 reads as,
Enforcement of contracts contingent on an event happening.-
Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened. —Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened.” If the event becomes impossible, such contracts become void.
What if the time limit is fixed in the happening of the Contingent Contract?
In such conditions, the contract becomes void if the specified uncertain event happens after the expiration of the fixed time. And if the uncertain event happens in the prescribed time frame then the contract may be enforceable.
For example, if A makes a contract with B to not buy B’s bike if C would come to buy the bike within 3 days.
If C would come to buy the bike within 3 days then A would not buy the bike.
This explanation is given under section 35 para 1 of the Indian Contract Act,1872. Which reads as,
When contracts become void, which are contingent on happening of specified event within fixed time.
Contingent contracts to do or not to do anything, if a specified uncertain event happens within a fixed time, become void if, at the expiration of the time fixed, such event has not happened, or if, before the time fixed, such event becomes impossible.
WHEN PERFORMANCE DEPENDS UPON THE NON-HAPPENING OF AN EVENT (Ss. 33)
It is as same as section 32 of the act, provided that the condition is NON- HAPPENING of an uncertain event. Contingent contract to do or not do to anything if an uncertain event not happened in the future.
for example- A makes a contract with B to buy B’s bike if C would not come to buy the bike.
In the above example, the contingency is that if C will not come to buy the bike then A will perform the contract between A and B. And if C came to buy the bike then A will not be liable to perform the contract.
Section 33 of the Indian Contract Act, 1872 reads as,
Enforcement of contracts contingent on an event not happening.—
Contingent contracts to do or not to do anything if an uncertain future event does not happen, can be enforced when the happening of that event becomes impossible, and not before.
What if the time limit is fixed for the non-happening of the Contingent Contract?
The contract becomes void if the specified uncertain event does not happen before the expiration of the fixed time. And if the uncertain event does not happen in the prescribed time frame then the contract may be enforceable.
For example, if A makes a contract with B to buy B’s bike if C would not come to buy the bike within 3 days.
If C could not come to buy the bike within 3 days then A would perform the contract.
This explanation is given under section 35 para 2 of the Indian Contract Act,1872. Which reads as,
When contracts may be enforced, which are contingent on specified event not happening within fixed time.
Contingent contracts to do or not to do anything, if a specified uncertain event does not happen within a fixed time, may be enforced by law when the time fixed has expired, and such event has not happened, or before the time fixed has expired, if it becomes certain that such event will not happen.
EVENTS LINKED WITH HUMAN CONDUCT (Ss. 34)
In this section, the condition is based upon the happening or non-happening of the conduct of the living person. In other words, the contingency is based upon the future uncertain conduct of the living person. Sections 32 and 33 are based upon the non-living things and section 34 is based upon the living person conduct.
For example, A agrees to pay a sum of money to B if, B marries C.
In the above example, the contract may be enforceable only when B marries C but the contract will be void if C married D. Though there are some possibilities of the performance of the contract if D died, or C and D get divorced. Then B would marry C and A would pay a sum of money as specified in the contract.
Section 34 of the Indian Contract act, 1872 reads as,
When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person-
If the future event on which a contract is contingent is the way in which a person will act at an unspecified time, the event shall be considered to 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.
Observation
Sections 32 to 35 talk about the contract which are not impossible to happen or not to happen. Whereas, if the future conditions are found to be impossible to happen or not to happen then there will be no contract rather it will be a void agreement under section 36 of the Indian Contract act, 1872.
Section 36 of the Indian Contract act, 1872 reads as,
Agreements contingent on impossible event void.
Contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made.
For example, A agrees to pay a sum of money to B if, B marries C. But the fact is that C is already dead, but none of the parties knows about this. Then this is not a contract but it is a void agreement.
