Contingent contracts are those contracts which are done for any act which has the probability of occurring in the future. These are the contracts which are totally dependent upon the time and the enforceability of which can only be established upon the occurrence of a certain act. According to Section 31 of the Indian Contract Act 1872, it is defined as' a contingent contact is a contact to do or not to do something, if some event collateral to such contract, does or does not happen’. In simple terms, it can be understood as a contact which can only be completed if a certain event has to be fulfilled. If the act has not happened, then the contact will be declared as void.
For example, : A says to B that if Titanic reaches New York before April 17th, he will pay B $100, but unfortunately, the ship sank on April 14th, then the contract will be void.
To make a contingent contract a valid contract, there are essential elements that must be present when the contract is going to be constituted among the parties.
Firstly, for making a contingent contract, there must be a condition in the contract that upon the happening of that condition, the contract should be performed. And the condition that is put in the contract must not be vague or impossible to be completed.
For example: Ajay says to her lover, Rita, if she accepts his love for her, he will bring stars and moon from the sky. Now seeing it as a part of law it is not possible for any person to bring stars and moon on earth, hence the promised made here is a vague and void.
Secondly, the condition or event which has been put in the contract, it is believed that it should be uncertain and it should not be in the control of either of the parties as the performance of the contract depends upon the happening of that future event.
For example: A house owner asked B painter to paint 4000sqs.ft. Area of his house in 2 days and he will pay him 10rs extra per sqs.ft. if he finishes it in due time, but A knows that minimum days required is 4. Therefore it is impossible to complete the task and the contract is void.
ENFORCEMENT OF CONTINGENT CONTRACTS
The enforcement of contingent contracts is discussed under the Indian Contract Act of 1872 from section 32 to section 36. This list lays down certain rules which can establish the enforceability of contingent contracts. which are as follows:
SECTION 32- This section of the act says 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. ’
According to this section, it is stated that the enforcement of a contract will only happen when there is the doing or not doing of an event collateral to the contract. The law can only enforce this contract when the event has happened. If the event does not take place, then it is not possible to enforce the contract and it will be declared void.
For example: A is a cricket lover and B says to him if player C hits 6 sixes in 6 balls, he will give him 1000 rs. If during that over, C misses one ball, the contract will not be enforced as the event which bears the legality of the contract did not happen.
SECTION 33: 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. 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.
According to his section, the law can enforce this contact when the event has taken place. Here, law drives power of enforcement from the happening of the event. If the event has occurred, the promisor becomes liable for the doing of his part of the contract. If any uncertain event takes place and stops the event, then it will be considered void.
For example, A and B are both friends. A says to B that if he gets more marks in the exam than C, he will give him a party. B scored 1st rank in the exam. Now this contract will be binding by law.
SECTION 34. When an event on which a contract is contingent is 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. —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.
According to this section, the contract is contingent on the conduct of the living person. Here, the future act of the person by whose act the contingent has been created plays a main role in the performance of the contract. If the person does an act which renders the main act impossible, then it is impossible to perform the contract. Therefore, it is required that the person should act specifically in the direction of the contract to make it enforceable.
For example, Amit told Sumit if he marries Geeta he will pay him a handsome amount of money. But before Sumit could marry Geeta, she married Ramesh. At this time, it is impossible for Sumit to marry Geeta. So the contingent contract cannot be performed here until and unless in the future Ramesh dies and Geeta approaches Sumit with a marriage proposal. Till that moment, this is void.
SECTION 35: When contracts become void, which are contingent on the happening of a specified event within a 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. 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 contracts may be enforced, which are contingent on a specified event not happening within a 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. 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.
In this section 35, two conditions have been laid down for the enforcement of the contract. Here the major factor is played by the time. The happening of an event within or not within the specific time limit has an important role in the validity of the contingent contract.
In the first part, it is said that if the event which is to happen in the future and due to any uncertain happening now it is unable to occur or now it is impossible to happen in a specific period of time, the contract will be void. This part focuses on the fact that the contract will become void if any contingent act does not happen within a specific time limit.
For example, X says to his friend Y that if he reaches the mall within 30 minutes, he will go watch a movie with him, and if he fails to come, he will ask Z to company him. Later on the way, Y was detained by police for rash driving and he couldn’t make it in time, so now the contract has become void as Y was late.
In the second part of the section, it is mentioned that if any act has not been completed within a specific period of time, the law drives its enforceability from the given time limit as the act has to be completed within the set time limit. The contract has to be enforced on two bases the act has to be in time limit or it can be done before the end of the time.
For example, the examiner says to students he will not accept any answer sheets after the end of the exam time limit. Three slow-writing students were late, and their answer sheets were not accepted as they hadn’t completed their act in the time and the examiner has authority to reject their answer sheets.
In an exam, a student submitted his answer sheet within 20 minutes of the start of the exam as he didn’t know the answer and he was unable to cheat. This contact is valid as he was within the time limit.
SECTION 36- 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. —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.
According to this section, it is said that an agreement will be called void if either of the parties to a contract has control over the contingent of the contract. Then it would not be considered a free contract. There should be no control of any party over the conditions of the contract. The contract will also be called void if the facts constituting the contingent are hidden or have not been made clear or have been falsely presented to the party.
For example, Q says to his friend W that if he marries the daughter of R, he will give him a good amount of money, but later it is found that the daughter of R has renounced the world and lives alone as a virtuous woman. Here, the agreement would be declared void as W is not able to marry the daughter of R and the act cannot be completed.
To conclude, it can be stated as a contract which is based on conditions and acts which are based on the future. If the act is completed accordingly, then the other party has to fulfil the commitment made at the time of making contact. All of our life insurance, car insurance, and medical insurance are contingent contracts, meaning they are based on an act that will occur in the future and will take effect when the contingent act is fulfilled. Giving a surety in a bank at the time of a loan is also a form of contingent contact. Teachers at school motivate students to study hard, and they will get good grades, which is also a contingent contract. The enforcement of the law depends upon the completion of a contingent act. Moreover, sections 32 to 36 lay down different conditions which are used for enforcement of contingent contracts.
This article is written by Yash Vashistha of Chandigarh University.