5 Rules of Contingent Contract under Indian Contract Act, 1872

Contracts are of two types. The first one is an absolute contract and the other is a conditional contract (contingent contract). In an absolute contract where no condition is needed for making an agreement but under a contingent contract, there is a condition that has to be fulfilled. The agreement depends on the happening or non-happening of the uncertain event.

Meaning

A contingent contract is defined under section 31 of the Indian Contract Act, of 1872. A contingent contract is a contract where the party will perform his duty only when the conditions are fulfilled. It depends on the happening or not happening the occasion.

For example-: Jack made a contract with the car insurance company. In which the insurance will pay him the damages amount if the car gets damaged in an accident. This is the contingent contract.

Essential elements of contingent contract

The contingent contract is conditional

The conditional contract means a contract is happening or not happening must be a future event and it must be uncertain. If the contract of event is a future event but certain and sure to happen, then it is not considered a contingent contract.

It depends on the happening or non-happening of the future event

The contingent contract is an uncertain future event and it depends on whether or not to do the uncertain event in the future. If it is sure to be performed then it is not a contingent contract.

The event must be connected to the main contract

In this, the contract should be collateral. It means the contract is attached to the main contract.

It should be uncertain

The contingent contract must be uncertain if it is sure to happen or performed then it is not a contingent contract and it is void.

Rules relating to contingent contract

Under sections 32 to 36 of the Indian Contract Act contingent contract are defined which are-:

Rule 1 contingent contract on the happening of the event

It comes under section 32 of the Indian Contract Act, of 1872 under which a contract is based on the happening of an uncertain future event. It became a valid contract and it is not enforced by law until the event takes place. But if the event becomes impossible then the contract is void.

For example-:  A made a contract with B with a condition that if he marry C then A will be pay him 80,000. It is a contingent contract but unfortunately, C died before marriage then it became a void contract because the happening of the contract is not possible.

Rule 2 contingent contract on not happening of the event

It comes under section 33 of the Indian Contract Act, 1872 under which a contract is based on not happening of an uncertain future event. It became a valid contract and it is enforced by law when the event is impossible to happen. But if the event becomes possible then the contract is void.

For example-:  A made a contract with B to pay him 10,000 if the boat did not come back and the boat sunk in the river. It became a contingent contract but if the boat came back then the contract became void.

Rule 3 contingent contract based on the future conduct of a living person

It comes under section 34 of the Indian Contract Act, of 1872 under which a contract is based on a living person who will act at the time of future than the event is taken as impossible when the person does anything which makes the event impossible to happen.

For example-: A put a condition to B that if B marries C then A will give money to B but C marries D in the future because of this the marriage of B with C is impossible.

Rule 4 contingent contract based on the event happening or not happening at the fixed time

It comes under section 35 of the Indian Contract Act, 1872 under which a contract is based on a time. When the event is happening or not happening depends on the fixed time that was mentioned under the conditions. If the event happens within the time the contract is considered valid if it does not happen within the time it becomes a void contract. It is also considered void if before the time fixed the event became impossible.

For example-: A made a promise to pay B 10,000 if the car returns to him on 1st August 2024. The law is enforced and A has to pay B if the car returns on time but if it does not, the contract becomes void.

Rule 5 contingent contract of an impossible event

It comes under section 36 of the Indian Contract Act, of 1872 this contingent contract is based on an impossible event and it becomes a void contract. Even the parties are aware or not about the impossibilities of the event.

For example-: A made a contract with B to pay him Rs 10,000 if the two parallel lines intersect each other. This is an impossible event. So the contract becomes void.

Difference between contingent and wagering contract

There is a slight difference between both agreements. Wagering contracts are not legal in India except horse racing but the contingent contract is legal in India. It is mentioned under the Indian Contract Act, of 1872. In a wagering agreement, the parties have only an interest in gaining but in a contingent contract, the interest of the parties depends on the happening or non-happening of uncertain events. The wager agreement is void but the contingent agreement is a valid contract.

Conclusion

The contingent contract is also known as a conditional contract. It is based on certain events that need to be fulfilled. It depends on the happening or not happening the future occasion. This contract is defined under sections 31 to 36 of the Indian Contract Act, of 1872.

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