Contingent Contract: Chapter III: of Contingent Contracts Sections 31 To 36

Contingent Contract
Chapter III: Of Contingent Contracts

Sections 31 to 36
Introduction
The performance of an absolute contract becomes due
immediately after making the contract.
But sometimes , the performance of a contract is not

immediately due , and it become so only after the
happening or non-happening of some contingency.
Such contracts are known as contingent contract.
Example:-
◦ Contract of insurance
◦ Contract of indemnity
◦ Contract of guarantee.

Definition of a Contingent Contract :
Section 31 Of Indian Contract Act
A contingent contract , may be defined as a conditional contract.
“A Contingent contract is a contract to do something

if some event , collateral to such contract , does or
does not happen. ’’
Example:-
◦Mr.X contracts to pay 10,000 Rs to Mr. Y if Mr. Y’s house is burnt

.
◦This is a contingent contract as its performance is dependent
upon an uncertain event.(i.e., burning of Mr. Y’s house).
Essentials Elements For A Valid
Contingent Contract
◦ There must be a valid contract.

◦ The performance of the contract must be conditional.
◦ The event must be uncertain.
◦ The event must be collateral to the contract.
Rules Regarding Enforcement Of
Contingent Contract
◦ Contingent contract dependent on the ‘happening’ of
future uncertain event.(Section 32)
◦ Contingent contract dependent on the ‘non-happening’
of future uncertain event.(Section 33)
◦ Contingent contract dependent on the ‘happening’ of
specified uncertain event ‘within fixed time’. (Section 35)
◦ Contingent contract dependent on the ‘non-happening
’ of specified uncertain event ‘within fixed time’.(Section
35)
◦ Contingent contract dependent on impossible event.
(Section 36)
Contingent Contracts Dependent On The
‘Happening’ Of Future Uncertain Event
• Contingent contract is dependent on the ‘happening’ of

a future uncertain event.
In such cases, the contract can be enforced only when
that uncertain event has happened .(Section 32)
Example:- A contracts to pay Rs.1000 to B if B marries C.

But C died before this marriage could happen.
In this case the contract becomes void as B’s marriage with
C has become impossible.
Contingent Contract Dependent On The ‘Non-
happening’ Of Future Uncertain Event

• In such cases , the contract can be enforced only
when the happening of that even becomes
impossible as then that event cannot happen.
• Only then the contract becomes enforceable as its
performance was dependent on the non-happening
of that event (Section 33)
• Example - A agreed to pay B Rs. 500 if a certain ship

did not return .The ship was sunk in war. It is a
contingent contract and can be enforced by law
when the ship sinks, because the ship can never
return .

Contingent Contract Dependent On The ‘Happening’
Of Specified Uncertain Event
Within Fixed Time
In such cases, the contract can be enforced if that event
happens within the fixed time. Thus, a contingent
contract dependent on the happening of specified
uncertain event within fixed time, becomes void in the
following cases (Section 35).
If the event does not happen within the specified time ;
or
If before the expiry of that time, the event becomes
impossible.
Example:- A agreed to pay Rs.1000 to B if a certain ship

returned within a year .
It is a contingent contract and can be enforced by law
only if the ship returns within a year.
Contingent Contracts Dependent On The ‘Non-
happening’ Of Specified Uncertain Event Within
Fixed Time

• A contingent contract dependent on the ‘non-
happening’ of a specified event within a fixed time, can
be enforced in the following cases;-
• If that event does not happen within the fixed time ; or
• If before the expiry of that time, it becomes certain that
the event will not happen (Section 35, second Para).
• Example;- A agreed to sell his house to B for Rs. 100,000,
if A’s father did not return from America within three
years. It is a contingent contract and can be enforced if
A’s father does not return within three years.
Contingent Contracts Dependent On
Impossible Event
• In such cases, the contract is void and cannot be enforced

by law. Such contracts will be void ab initio whether the
impossibility of the event is known or not to the parties at
the time of making the contract.[section 36]
• Example;- A agreed to pay Rs.500 to B if he proved that
two straight lines can enclose a space.
• This is a void agreement as two straight lines can never
enclose a space.
When event on which contract is
contingent to be deemed impossible, if it
is the future conduct of a living person
• That contingent contract in section 34 of Indian contract act,
which reads as under;-
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.
Example;- A agreed to pay Rs. 5000 to B if B married C. But

subsequently, C married D.
• In this case the marriage of B with C must now be considered

impossible.

Wager: Section 30
Section 30 of the Indian Contract Act deals with the wagering agreements but this section
has not defined ‘wager’.

In the leading case of Carlill vs. Carbolic Smoke Ball Co. , Hon’ble Justice Hawkins has
given an illustrative definition of wager . According to him a wagering contract is one by
which two persons professing to hold opposite views touching the issue of a future
uncertain event , mutually agree that , dependent on the determination of that event ,
one shall pay or hand over to him , a sum of money or other stake ; neither of the
contracting parties having any other interest in that contract than the sum or stake he
will so win or loss , there being no other real consideration for the making of such
contract by either of the parties .
It is essential to a wagering contract that each party may under it either win or loss ,
whether he will win or loss being dependant on the issue of the event , and , therefore ,
remaining uncertain until that issue is known . If either of the parties may win but can not
loss , it is not a wagering contract .
Wagering agreements Contingent contracts
1. A wagering agreement is void according to section 30 subject to But the contingent contract is valid except when the event becomes
some exceptions . impossible under section 32 .
2. Wagering agreement is a game of chance , the parties have no On the other hand , contingent contract is not a game of chance but
other interest in the subject matter of the agreement except it is a contract to do or not to do something , if some event collateral
winning or losing of the amount of wager . to such contract , does not happen .
3. In the wagering agreement , the future uncertain event is the sole In the contingent contract , the future event is only collateral to such
issue . And dependent on the determination of that event . contract .
4. Wagering agreement is based on reciprocal promises of the But a contingent contract may not be based on such reciprocal
parties . There is mutual agreement of both the parties to give promises .
money or money’s worth upon the determination or
ascertainment of an uncertain event .
5. Wagering agreement is a kind of species of contingent contract . It Where as contingent contract is the genus and it may not have the
has the nature of contingent . wagering nature .

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Contingent Contract

Chapter III: Of Contingent Contracts

But sometimes , the performance of a contract is not

Such contracts are known as contingent contract.

“A Contingent contract is a contract to do something

◦Mr.X contracts to pay 10,000 Rs to Mr. Y if Mr. Y’s house is burnt

◦ There must be a valid contract.

• Contingent contract is dependent on the ‘happening’ of

Example:- A contracts to pay Rs.1000 to B if B marries C.

• Example - A agreed to pay B Rs. 500 if a certain ship

Example:- A agreed to pay Rs.1000 to B if a certain ship

• In such cases, the contract is void and cannot be enforced

If the future event on which a contract is contingent, is the way

Example;- A agreed to pay Rs. 5000 to B if B married C. But

• In this case the marriage of B with C must now be considered

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