JAMIA MILLIA ISLAMIA NEW DELHI-110025 FACULTY OF LAW CONTRACT ASSIGNMENT-SEMESTER -1 TOPIC- ANALYSIS OF CONTINGENT CONTRACT IN INDIA NAME-CHIRAG BHARDWAJ STUDENT ID-202305941(R) COURSE-B.A.LL.B (HONS.) SELF FINANCE SEMESTER- 15? SERIAL NO-12 SUBMITTED TO- MS. VARSHATable of Content 1. Abstract. 2. Conceptual meaning. 3. Essentials of Contingent Contract. 3.1 Conditional contract 3.2 Contingency to be collateral to contract. 3.3 Contingency to be condition precedent. 3.4 Contingency depending upon the will of a person. 4. When enforcement depends upon happening of an event{S.32] 5. When performance depends upon non-happening of an event [S. 33] 6. Events linked with Human Conduct [S. 34] 7. When Contract becomes Void [S.35] 8. Agreements contingent on impossible events, Void. 9. Conclusions. 10. References.The topic of this project is “Analysis to Contingent Contract *. It aims to portray what is the meaning of contingency and contingent contracts in India in a detailed manner. It discusses about what is Contingent Contract according to the Indian Contract Act,1872 then, what are its essential elements and how does a contract qualified to be considered as a Contingent Contract. Then this assignment covered important Judicial Pronouncements to deeply understand the concept of Contingent Contract and how does an uncertain future event play as an essential ingredient for Contingent Contract in India, 2. CONCEPTUAL MEANING According to the section-2(h) of Indian Contract Act,1872- “An agreement enforceable by law is a Contract”. For every contract, there should be an agreement that is made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object. ‘Thus, firstly to form a contingent contract there should be valid contract. Cambridge dictionary defines Contingent word as “depending or influenced by something else’. In the Indian Contract Act,1872 this word has been used to mean Conditional. Section 31 to 36 of Indian Contract Act,1872 deals with the Contingent contract. The expression “Contingent Contracts” is defined in Section 31 of the contract Act: 8.31. “Contingent Contract” defined- 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. Ilustration- A Contracts to pay B Rs 10,000 if B’s house is burnt. This is a Contingent Contract. Using this illustration and the definition given in Section 31 we can clearly infer that if B’s house is burnt A will pay 10,000 to B. Therefore, A will do something( to pay to B) if the collateral event happens That is if the house is burnt, so, the necessary thing in a contingent contract is an event collateral to a contract. 'Collateral event in Pollock and Mulla is defined as “an event which is neither a performance directly promised as part of the contract, nor the whole of the consideration for a promise”.In the illustration above the burning of B’s house is neither a performance promised as part of a the contract nor itis the consideration obtained from B. Inlan Contract Act, 1872, Act of 1872. avatar singh, Contract an specific Relief (13 Ed, 2022), > Pallack and Mula, Contract. “istration 5.3, Indian Contract Act. 1872.‘ssentials to Contingent Contract. 3.1- Conditional contract- It is a sort of conditional contract and a condition is of uncertain nature. When the condition is of uncertain nature then, then only the contract can be regarded as truly contingent. The event has to be very futuristic and uncertain. An event become uncertain only if its occurrence is not in the hands of any individual and the time is in future. "In Chandulal harjivandas v. CIT “commission payable on the success of litigation is held to be Contingent Contract by the supreme Court of India”. From this we can infer that success of litigation is the condition for commission which is an uncertain event. ntingency to be collateral to contract- This essential emphasises that the contingency contemplated by the contract must be collateral to the contract, It means that a contract has already arisen or a subsisting contract is there, but its performance cannot be demanded unless the contemplated event happens or does not happen. *In Rojasara Ramjibhai Dahyabhai V. Jani Narottamdas Lallubhai “A contract to buy a land which is under a dispute made with a party to the dispute and becomes operative if he wins the case, is ‘a contingent contract”.‘ In Dalsukh M. Pancholi V. Guarantee Life and Employment Insurance Co Itd, “A contract to sell a piece of land which was the subject matter of the ongoing consolidation proceedings was held to be of contingent nature because nobody can tell beforehand to whom the land might become allotted. It was not enforceable until and unless the consolidation would leave the land in the hands of the seller”. 3.3- Contingency to be Condition Precedent- Generally, the condition which is collateral to the performance of a contract is a condition precedent, ic. it has to be satisfied first and then the performance can be demanded. Condition precedent in the context of a contingent contract means that though there is a concluded contract between the parties but the performance cannot be demanded till the said condition is fulfilled. 3.4- Contingency depending upon the will of a Person- A contract will be no less contingent where the happening or non-happening of the contingency depends upon the will of a party. “In Secy of State For India y. A.J. Arathoon, The case involves supply of timber toa government department. The timber was to be approved by the superintendent of the factory. He did not approve the timber was to be approved by the superintendent of a factory. He did not approve the timber actually supplied. The supplier sued the government for breach 2 Chandulal Harvandas v. CIT, AIR 1967 SC > Rojsara Ramiibhai Dahyabhalv. Jani Narottamdas Laub, AIRI986 SC. “ Dalsukh M. Pancholiv. Guarantee Life and employment Insurance co Itd, AIR 1947 PR 182, 5 Secy of State For India v. AJ. Arathoon, 6 avatar Singh, Contract and Specific Relief Act (13 Edn, 2022)of contract . “The Madras High Court held , the fact of approval being collateral to the performance of the contract, its performance could not be demanded till such approval and the court regarded it as a contingent contract”. 4. When enforcement depends upon happe! of an event[S.32 S. 32. Deals with Enforcement of contracts contingent on an event happening. The Indian Contract Act 1872 defines it as:~ 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”. ‘The section lays down two basic principles. First, a contract to do an act on the happening of a future uncertain condition cannot be enforced unless and until that event happens. Second, if the happening of that event has become impossible, the contract becomes void. “Illustrations:- A makes contract with B to buy B’s horse if A survives C. This contract cannot be enforced by law unless and until c dies In A’s lifetime. A contracts to pay B a sum of money when B marries C. C dies without being married to B. ‘The contract becomes void. From above both illustrations we can clearly interpret the two principles of this section In ®National Agricultural coop Mktg federation Of India y. Alimenta S.A “The agreement to export certain agro products was contingent upon approval by the government, it was regarded to have become void once the government refused the approval and passed an order prohibiting the export of the said goods” In °V.P desa v. Union of India A car was insured against loss in transit, the car was damaged without being put in the course of transit, the insurer was held to be not liable. “The court said the contract would also not be enforceable where the event does not happen in a way contemplated by the contract”. 5. When performance depends upon non-happening of an event [S. 33] Section 33 deals with Enforcement of Contracts Contingent on an event not happening. The Indian Contract act 1872, defines it as:- S indian Contract Act,1872 (Act 9 of 1872) ? avatar singh, Contract and specific relief Act (13° edn.,2022), " National Agricultural Coop Mktg federation of india v. Alimenta S.A. °\V.P. Desa V, Union of india,© “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”. Where the performance of a contract depends upon the non-happening of an event, naturally the parties have to wait till the happening of that event becomes impossible. When such circumstances come to pass that show that the event can no more happen, then only the performance of the contract can be demanded, ‘IHlustration- A agrees to pay B a sum of money if a certain ship does not return. The ship sunk. The contract can be enforced when the ship sinks. From this illustration we can conclude that after the sinking of ship only we can demanded the performance of this type of contingent contract. 6. Events linked with Human Conduct [S. 34) Section 34 deals with When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person. The Indian Contract Act 1872 Defines it as:~ 2If 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 that he should so ‘act within any definite time, or otherwise than under further any contingencies”. When the event for which the parties are waiting is linked with the future conduct of a person, that is to say, where the contract is enforceable if a certain person is to act in a certain way, the event shall be considered to have become impossible if that person does anything which makes it impossible that he should act in that way in any definite time or without further contingencies being fulfilled. In “Frost V. Knight, defendant promised to marry the plaintiff on the death of his father. While the father was still alive, he married another women. It was held that it has become impossible that he should marry the plaintiff and she was entitled to sue him for the breach of contract. 7.When Contract becomes Void [S.35) 2 Indian Contract Act,1872, $.33 4 illustration pg.351 Avatar singh, Contract and specific relief act,(13" Edn.,2022) 12 Indian Contract Act,1872 8.34 2 Frost V. KnightSection 35 deals with When contract becomes Void, which are contingent on happening of specified event within fixed time. The Indian contract Act 1872 defines it as: “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 expire, if it becomes certain that such event will not happen”. ‘Thus, From this definition we can interpret two basic principles, First if an uncertain future event happens within a specified fixed time, it will be considered as a valid contingent contract act. Second, If an uncertain future event does not happen in the specified fixed time then the contract becomes void within the purview of this definition. To understand it more deeply we can take the help of this illustration :- 'SIllustration:- A promises to pay B a sum of Money if a certain ship returens 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. Second part of this section deals with When Contract may be enforced, which are contingent on specified event not happening within fixed time. This part is opposite to thwe first part of this section. The Indian Contract Act 1872 defines it as : “Contingent Contracts to do or not to do anything, if 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 From this definition we can interpret that if an specified uncertain event has been not happened within a fixed time, then only the contract can be enforced and form as a valid contingent contract. Illustration- 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 is burnt within a year. 4 Indian Contract Act,1872 8.35. illustration, pg.352, Avatar Singh, Contract and specific relief (13" Edn.,2022)Agreements contingent on impossible events, Void. Section 36 of Indian Contract act 1872 deals with Contingent on impossible events, It has been defined as- “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”. From this definition we can interpret that, if an event is impossible in nature whether the parties know it or not the contract becomes Void. Ilustrations- A agrees to pay B 1000 rupees if two straight lines should be enclose a space. ‘The agreement is considered as Void. A agrees to pay B 1000 rupees if b will marry a’s daughter c. ¢ was dead at the time of the agreement. The agreement is void. In both these illustrations the event is impossible in nature, hence the contracts has become void. 9. Conclusion Therefore, the Indian Contract Act, 1872 deals very comprehensively with the contingent contract and its types under section 31 to 36. Contingent Contract should have some uncertain futuristic event which should not be impossible in nature and the event should be collateral to the agreement between the parties. Contingent Contract are very important in real life contracts like insurance policies and indemnity. In a contingent contract the event should be happened and contingency of that event should be precedent in nature following, the prerequisites of essential elements in contingent Contract. The contingency events have also sometimes have the specified time limits under which the event have to be happened or not according to the essentials of contract. If an uncertain event is impossible in nature, then the contract becomes void and hence cannot be enforced. Thus in this assignment I envision on the concept of Contingent contract and deeply analysed it through the help of various case laws.10. References 1. Indian contract act,1872 ( Act 9 of 1872). 2. Avatar Singh, contract and Specific relief (13" Edn.,2022), 3, Pollock and Mulla, Contract Law. 4, Law of Contract, Dr R.K Bangia. 5. www.lawetopus.com 6. www.legalservicesindia.,com 7. Journal Lex Research Hub. 8. wwwalexforticom 9. Indian journal of law and Legal research.