Introduction:

A contingent contract is a contract where the performance of the contract is dependent on the occurrence of a particular event. According to Section 31 of the Indian Contract Act, 1872, a contingent contract is a contract to do or not to do something if an uncertain future event happens or does not happen. The event must be such that it is capable of being proved to be either certain or uncertain.

As per Section 31 of the Act, a contingent contract is a contract to do or not to do something if an uncertain future event happens or does not happen. The event must be such that it is capable of being proved to be either certain or uncertain.

The section further provides that if the event becomes impossible, the contract becomes void. However, if the event becomes impossible due to the fault of a party to the contract, that party is liable for any damages resulting from such failure.

Essential elements of a contingent contract:

1. Uncertain future event: The performance of the contract must be dependent on the occurrence or non-occurrence of an uncertain future event.
2. Possibility of the event happening: The uncertain event must be possible, meaning it must not have already occurred or be impossible to occur.
3. Parties must have knowledge of the contingency: Both parties must have knowledge of the contingency at the time of entering into the contract.
4. Contract must not be void: The contract must not be void or illegal.
5. Performance must become impossible: If the uncertain event does not occur, or if it becomes impossible to occur, the contract becomes void.

Example of a contingent contract:

Suppose that a company enters into a contract with a supplier for the delivery of a certain amount of goods. The supplier promises to deliver the goods within a certain time frame, provided that the company pays the agreed-upon price. However, if the goods are destroyed before delivery due to an unforeseen event such as a natural disaster, the supplier is not obligated to deliver them. The contract is contingent on the occurrence or non-occurrence of the uncertain event of the goods being destroyed, and the performance of the contract depends on the occurrence or non-occurrence of that event.

For example, A agrees to pay B a sum of money if it rains tomorrow. This is a contingent contract, as it is dependent on an uncertain future event (rain). If it rains tomorrow, A is obligated to pay B the agreed sum of money. However, if it does not rain, A is not required to pay.

In another example, A agrees to sell a specific piece of land to B if it is not acquired by the government. This is a contingent contract, as it is dependent on an uncertain future event (government acquisition). If the government does not acquire the land, A is obligated to sell it to B. However, if the government does acquire the land, the contract becomes void.

KINDS OF CONTINGENT CONTRACT :

The Indian Contract Act, 1872’s Sections 32 to 36 list several types of dependent contracts, including:

32. i) According to Section 32. Contracts that are subject to change if a certain event occurs cannot be legally implemented until the event has actually occurred. Such a contract is void if the occurrence becomes improbable.

An agreement to give B a certain amount of money when B weds C is an example. C passes away before getting wedded to B. The agreement is invalid.

.ii) Section 33 states that a contingent contract to do or not do something may be implemented by the law if an uncertain future event does not occur when it becomes impossible for it to occur.

Example: If a specific ship does not arrive, A agrees to give B a certain amount of money. The vessel has sank. When the ship sinks, the agreement can be put into effect.

iii) According to Section 34, if a future event on which a contract is contingent is the course of action that a person will take at an unspecified time, the event will be deemed to be impossible once that person takes any action that makes it impossible for him to take that action within a specific timeframe or absent other contingencies.

Example: If B marries C and C marries D, A agrees to give B a certain amount of money. The union of B and C must now be regarded as impractical, even if D were to pass away and C were to subsequently wed B.

1. iv) Section 35 states that:- contingent contracts to do or not to do anything if a special uncertain event occurs within as specified time become void if such event has not occurred by the expiration of the time fixed, or if such becomes impossible before the time fixed.

Example: If a specific ship returns within a year, A promises to give B a certain amount of money. If the ship returns within a year, the contract may be put into effect; however, if the ship is burned within that year, the contract is invalid.

1. v) According to Section 36, agreements that are dependent on the occurrence of an impossible event are void regardless of whether the parties to the contract were aware of the impossibility of the event at the time the contract was made.

EXAMPLE: If two straight lines are to enclose an area, A and B agree to pay each other a sum of Rs. 1000.00. The deal is null and invalid.

Case law related to contingent contracts:

One notable case related to contingent contracts is Fateh Chand v. Balkishan Das (1963), where the plaintiff entered into a contract to sell goods to the defendant, with the delivery of the goods contingent upon the arrival of a ship. The ship was delayed, and the defendant refused to accept the goods. The court held that the contract was contingent upon the arrival of the ship, and since the ship had not arrived, the plaintiff could not perform the contract. Therefore, the contract was void.

A case where contingent contract was the main issue is Ramlal v. Rewa Coalfields Ltd. In this case, the plaintiff entered into a contract with the defendants to transport coal. The contract was contingent on the defendant’s receipt of an order for the coal from a third party. The plaintiff sued the defendants for breach of contract when they failed to provide the coal for transportation. The court held that the contract was a contingent contract, and as the third party had not placed the order, the defendants were not liable for breach of contract.

Conclusion

In conclusion, a contingent contract is a contract that is dependent on the occurrence of an uncertain future event. If the event becomes impossible, the contract becomes void. However, if the event becomes impossible due to the fault of a party to the contract, that party is liable for any damages resulting from such failure.

A contingent contract is a contract that is dependent on the occurrence or non-occurrence of a particular event, and the performance of the contract is not required until that event occurs or does not occur.