Assignment on
Law of Contract I
Submitted by Submitted to
Mamoon Rashid Madam Nadia
Roll no 1809 Arooj
LLB Five Years Subject :Law of
Session 2018-23 Contract I
3rd Semester Law College
Law College Gomal University
GU-DIK
Subject
Law of Contract I
Topic
Contingent Contract & its
Modes
Definition of Contingent Contract:-
Reference to Section 31:-
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.
Explanation:-
An absolute contract is one where the
promisor performs the contract without
any condition. Contingent contracts, on
the other hand, are the ones where the
promisor performs his obligation only
when certain conditions are met.
If you look at the contracts of insurance,
indemnity or guarantee, they have one thing in
common – they create an obligation on the
promisor if an event which is collateral to the
contract does or does not happen.
For example, in a life insurance contract, the
insurer pays a certain amount if the insured dies
under certain conditions. The insurer is
not called into action until the event of the
death of the insured happens. This is a
contingent contract.
Essentials of Contingent Contracts
1. Dependence on Happening of
Event.
The contract is contingent on the happening
or the non-happening of a certain event.
These said events can be precedent or
subsequent, this will not matter.
Say for example A promises to pay B Rs 5,000
if the if the train reaches Lahore on time. This
is a contingent event.
2). Collateralized Event.
It is important that the event is not a part of
the contract. It cannot be the performance
promised or a consideration for a promise.
Non-Contingent Contract
Mamoon enters into a contract with Bilal and
promises to deliver 5 television sets to him.
Bilal promises to pay him Rs 75,000 upon
delivery. This is not a contingent contract
since Bilal’s obligation depends on the event
which is a part of the contract (delivery of TV
sets) and not a collateral event.
Contract Which is Contingent
Peter enters into a contract with John and
promises to deliver 5 television sets to him if
Brazil wins the FIFA World Cup provided
John pays him Rs 25,000 before the World
Cup kicks-off. This is a contingent contract
since Peter’s obligation arises only when Brazil
wins the Cup which is a collateral event.
3. The Event Should Not Be A Mere
Will Of The Promisor
The event cannot be a wish of the promisor.
Say for example Mamoon promises to pay
Bilal Rs 5,000 if Argentina wins the FIFA
World Cup provided he wants to. This is
not a contingent contract. Actually, this is
not a contract at all.
Example:-
Mamoon promises to pay John Rs 50,000
if he leaves DIKhan for Dubai on June 30,
2020. This is a contingent contract.
Going to Dubai can be within Bilal’s will
but is not merely his will.
4. Uncertainty of Event:-.
If the event is sure to happen, then the
contract is due to be performed. This is not
a contingent contract. The event should be
uncertain.
Example-.
Mamoon promises to pay Bilal Rs 500 if it
rains in Islamabad in the month of July
2020. This is not a contingent contract
because in July rains are almost a certainty in
Islamabad.
Modes Of Contingent Contract
The enforcement of contingent contract has different rules for 2
different modes of Contingent Contract, which are following
● Contract Contingent on Event happening.
● Contract Contingent on Event not Happening.
● Contract Contingent on future Event of living Person.
● Conrract Contingent on Event happened within specified time.
● Contract Contingent on Event not happening within specified
time .
● Agreement contigent on impossible Event.
"Enforcement of contracts
contingent on an event
happening"
Reference to Section 32:-
Enforcement:-
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.
Voidability:-
If the event becomes impossible, such contracts
become void.
Contracts Contingent on the happening of
an Event Explained
A contingent contract might be based on the
happening of an uncertain future event. In such
cases, the promisor is liable to do or not do
something if the event happens. However, the
contract cannot be enforced by law unless the
event takes place. If the happening of the event
becomes impossible, then the contingent
contract is void. This rule is specified in Section
32 of the Contract Act, 1872.
Example-.
Asad promises to pay Ali Rs 50,000 if he can
marry Maryam, the prettiest girl in the
neighborhood. This is a contingent contract.
Unfortunately, Maryam dies in a car accident.
Since the happening of the event is no longer
possible, the contract is void.
"Enforcement of contracts
contingent on an event not
happening"
Reference to Section 33:-
Enforcement:-
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.
Contracts Contingent on an Event not
happening Explained
A contingent contract might be based on the
non-happening of an uncertain future event.
In such cases, the promisor is liable to do or
not do something if the event does not
happen. However, the contract cannot be
enforced by law unless happening of the event
becomes impossible. If the event takes
place, then the contingent contract is void. This rule
is specified in Section 33 of the Contract Act, 1872.
Example-.
Mamoon promises to pay Bilal Rs 50,000 if the
ship named Titanic which leaves on a dangerous
mission does not return. This is a contingent
contract. This contract is enforceable by law if the
ship sinks making its return impossible. On the
other hand, if the ship returns, then the contract
is void.
Contract Contingent on Future
Event of living Person
Who makes Event Impossible
● Reference to Section 34 :-
If the future event on which a contract is
contingent is the way in which a person will act at
an unspecified time,
Impossibility.
● 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.
Explanation.
Section 34 of the Contract Act, 1872 states
that if a contract is a contingent upon how a
person will act at a future time, then the event
is considered impossible when the person does
anything which makes it
impossible for the event to happen.
Example-.
Peter promises to pay John Rs 5,000 if he marries
Julia. However, Julia marries Oliver. Julia’s act thus
renders the event of John marrying her impossible.
(A divorce is still possible though but the
happening of the event is considered impossible.)
Contract Contingent on Event
Happening within specified
time:-
● Reference to Section 35.
Voidability:-
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.
Enforceability:-
-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.
Explanation:-
● There can be a contingent contract wherein a
party promises to do or not do something if a
future uncertain event happens within a fixed
time. Such a contract is void if the event does
not happen and the time lapses. It is also void
if before the time fixed, the happening of the
event becomes impossible. This rule is specified in
Section 35 of the Contract Act, 1872.
Example:-
Mamoon promises to pay John Rs 5,000 if the ship
named Titanic which leaves on a dangerous mission
returns before July 01, 2020. This contract is
enforceable by law if the ship returns within the
fixed time. On the other hand, if the ship sinks, then
the contract is void.
● Contingent contracts might be based on
the non-happening of an uncertain future
event within a fixed time. In such cases,
the promisor is liable to do or not do
something if the event does not happen
within the said time. The contract can be
enforced by law if
the fixed time has expired and the event
has not happened before the expiry of
the time. Also, if it becomes certain that
the event will not happen before the
time has expired, then it can be enforced
by law. This rule is specified in Section
35 of the Contract Act, 1872.
Example:-
Mamoon promises to pay Bilal Rs 5,000 if the
ship named Titanic which leaves on a dangerous
mission does not return before July 01, 2020.
This contract is enforceable by law if the ship
does not return within the fixed time. Also, if the
ship sinks or is burnt, the contract is enforced by
law since the return is not possible.
Agreements Contingents on
Impossible Events:-
● Reference to Section 36.
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.
Explanation:-
If a contingent contract is based on the
happening or non-happening of an impossible
event, then such a contract is void. This is
regardless of the fact if the parties to the contract
are aware of the impossibility or not. This rule is
specified in Section 36 of th Contract Act, 1872.
Example:-
Mamoon promises to pay Bilal Rs 50,000 if
the sun rises in the west the next morning.
This contract is void since the happening of
the event is impossible.
Illustrations
Illustration Sec31
A contracts to pay B Rs. 10,000 if B's
house is burnt. This is a contingent
contract.
Example of sec 31
Peter is a private insurer and enters into a contract with
John for fire insurance of John’s house. According to the
terms, Peter agrees to pay John an amount of Rs 5 lakh if
his house is burnt against an annual premium of Rs
5,000. This is a contingent contract.
Here, the burning of the house is neither a performance
promised as a part of the contract nor a consideration.
Peter’s liability arises only when the collateral event
occurs.
Sec 32
Illustrations
(a) A makes a contract with B to buy B's horse
if A survives C. This contract cannot be
enforced by law unless and until C dies is A's
lifetime.
(b) A makes a contract with B to sell a horse to
B at a specified price, if C, to whom the horse
has been offered, refuses to buy him. The
contract
cannot be enforced by law unless and
until C refuses to buy the horse.
(c) A contracts to pay B a sum of money
when B marries C. C dies without being
married to B. The contract becomes void.
Illustration sec 33
A agrees to pay B a sum of money if
a certain ship does not return. The
ship is sunk. The contract can be
enforced when the ship sinks.
Illustration Sec 34
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.
Illustrations Sec 35
(a) 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.
(b) 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 burnt within the year.
Illustrations Sec 36
(a) A agrees to pay B 1,000 rupees if
two straight lines should enclose a
space. The agreement is void.
(b) A agrees to pay B 1,000 rupees if
B will marry A's daughter C. C was
dead at the time of the agreement.
The agreement is void.
The End