Module 7
# Contingent contract :-
A contingent contract is a type of agreement defined under the Indian
Contract Act, 1872. It is a contract whose performance depends on the
occurrence or non-occurrence of an uncertain future event. Contingent
contracts are conditional, as they rely on the happening or not happening of
an event that is not within the control of the parties. Section 31 of the Act
defines contingent contracts and provides the legal framework for their
enforceability.
### Definition of Contingent Contract
According to Section 31 of the Indian Contract Act, a contingent contract is
defined as:
"A contract to do or not to do something if some event, collateral to such
contract, does or does not happen."
For example, A agrees to pay B ₹10,000 if B’s ship safely reaches the port.
This is a contingent contract, as the obligation to pay arises only if the ship
reaches the port safely.
### Features of Contingent Contracts
1. **Dependency on an Event**:
The performance of a contingent contract is dependent on an uncertain
future event. This event must be collateral to the contract.
2. **Uncertainty of Event**:
The event on which the contract depends must be uncertain, meaning its
occurrence or non-occurrence is not guaranteed at the time of the
agreement.
3. **Lawful Object and Consideration**:
Like other contracts, a contingent contract must have a lawful object and
consideration.
4. **Collateral Event**:
The event must be collateral or incidental to the contract. The event itself
is not the primary subject matter of the agreement.
5. **Enforceability**:
A contingent contract becomes enforceable only when the specified
event occurs or does not occur, depending on the terms of the agreement.
### Provisions of the Indian Contract Act Regarding Contingent Contracts
Sections 31 to 36 of the Indian Contract Act deal with contingent contracts
and outline the rules for their validity and enforceability.
#### Section 31: Definition of Contingent Contracts
This section provides the definition of a contingent contract, as mentioned
earlier. It clarifies that the performance of such a contract is conditional
upon the occurrence or non-occurrence of a collateral event.
#### Section 32: Enforcement of Contracts Contingent on Happening of an
Event
According to Section 32, contingent contracts to do or not to do something
upon the happening of an uncertain future event can be enforced only if
and when the event occurs.
- For example, A contracts to sell goods to B if it rains on a particular day. If
it rains, the contract becomes enforceable.
#### Section 33: Enforcement of Contracts Contingent on Non-Happening
of an Event
Section 33 states that contingent contracts to do or not to do something
upon the non-happening of an uncertain future event can be enforced only
if it is certain that the event will not happen.
- For example, A agrees to pay B ₹5,000 if B’s ship does not return from a
voyage. If the ship is lost and does not return, the contract becomes
enforceable.
#### Section 34: When Event on Which Contract is Contingent is
Impossible
If the event on which a contingent contract depends becomes impossible,
the contract becomes void.
- For example, A contracts to pay B a sum of money if a particular ship
reaches the port. If the ship sinks, the contract becomes void.
#### Section 35: Contracts Contingent on the Conduct of a Living Person
If a contract depends on how a person acts or behaves, it can be enforced
only if the person performs the act or refrains from it. If the person’s
conduct makes the performance of the contract impossible, the contract
becomes void.
- For example, A agrees to pay B ₹10,000 if B marries C. If B marries
someone else, the contract becomes void.
#### Section 36: Agreement Contingent on Impossible Events
An agreement contingent upon the happening of an impossible event is
void from the outset, as the event can never occur.
- For example, A agrees to pay B a sum of money if it rains on the moon.
This agreement is void as the event is impossible.
### Essential Rules for Enforceability of Contingent Contracts
1. **Event Must Be Collateral**:
The contract must depend on an event that is collateral to the main
agreement. The event itself cannot be the consideration or object of the
contract.
2. **Uncertain Event**:
The event on which the contract depends must be uncertain at the time of
making the contract. If the event is certain to occur, the contract is not
considered contingent.
3. **Happening or Non-Happening**:
A contingent contract can depend on either the occurrence or
non-occurrence of an event.
4. **Legal Validity**:
The contract must meet all other requirements of a valid contract, such as
free consent, lawful consideration, and a lawful object.
5. **Event Must Not Be Impossible**:
If the event is impossible, the contract is void from the beginning.
### Examples of Contingent Contracts
1. **Happening of an Event**:
A contracts to sell goods to B if B’s ship arrives at the port. This is a
contingent contract and becomes enforceable only when the ship arrives.
2. **Non-Happening of an Event**:
A agrees to pay B ₹5,000 if a certain ship does not return within a year. If
the ship does not return within the specified time, the contract becomes
enforceable.
3. **Conduct of a Person**:
A agrees to pay B a sum of money if B divorces C. If B divorces C, the
contract is enforceable.
4. **Impossible Event**:
A agrees to pay B ₹10,000 if a dead person comes back to life. This
agreement is void as the event is impossible.
### Conclusion
Contingent contracts, as defined under Sections 31 to 36 of the Indian
Contract Act, 1872, provide a mechanism for parties to enter into
agreements based on uncertain future events. These contracts are valid
and enforceable as long as they meet the essential conditions of a valid
contract and the event on which they are based is lawful and possible. By
distinguishing contingent contracts from wagering agreements and other
types of contracts, the law ensures clarity and enforceability, promoting
their use in lawful and practical applications like insurance and indemnity.
# Quasi Contract:-
A quasi-contract, as recognized under the Indian Contract Act, 1872, refers
to obligations that arise not from a formal agreement between parties but
by operation of law. Quasi-contracts are found in Sections 68 to 72 of the
Act and are imposed by the courts to prevent unjust enrichment of one
party at the expense of another. In these cases, even though there is no
actual contract, the law creates an obligation similar to that of a contract.
### Key Provisions Regarding Quasi-Contracts
1. **Supply of Necessaries (Section 68)**:
If a person provides necessaries to someone who cannot contract (such
as a minor or an incapacitated person), the supplier is entitled to be
reimbursed from the property of the person receiving the necessaries.
2. **Payment by an Interested Party (Section 69)**:
If a person pays money for another’s obligation (e.g., settling a debt) in
which they have an interest, they have a right to be reimbursed by the party
for whom the payment was made.
3. **Obligation to Pay for Non-Gratuitous Acts (Section 70)**:
If a person lawfully does something for another or delivers anything
without the intent of doing so for free, and the benefit is accepted, the
beneficiary must compensate for the service or goods received.
4. **Finder of Goods (Section 71)**:
A person who finds lost goods and takes them into their custody has the
same responsibility as a bailee and must take care of the goods.
5. **Mistaken or Coerced Payment (Section 72)**:
If money or goods are received by mistake or under coercion, the
recipient is bound to return them.
### Significance of Quasi-Contracts
Quasi-contracts ensure fairness by requiring a person who benefits at
another’s expense to compensate for that benefit, even in the absence of a
formal contract. This legal concept promotes equity, preventing unjust
enrichment and promoting justice in transactions where a contractual
relationship does not formally exist.
Q.What is contingent contract? State the provisions of the Indian
Contract Act, 1872 with regard to contingent contracts
A contingent contract is a type of agreement defined under the Indian
Contract Act, 1872. It is a contract whose performance depends on the
occurrence or non-occurrence of an uncertain future event. Contingent
contracts are conditional, as they rely on the happening or not happening of
an event that is not within the control of the parties. Section 31 of the Act
defines contingent contracts and provides the legal framework for their
enforceability.
### Definition of Contingent Contract
According to Section 31 of the Indian Contract Act, a contingent contract is
defined as:
"A contract to do or not to do something if some event, collateral to such
contract, does or does not happen."
For example, A agrees to pay B ₹10,000 if B’s ship safely reaches the port.
This is a contingent contract, as the obligation to pay arises only if the ship
reaches the port safely.
### Features of Contingent Contracts
1. **Dependency on an Event**:
The performance of a contingent contract is dependent on an uncertain
future event. This event must be collateral to the contract.
2. **Uncertainty of Event**:
The event on which the contract depends must be uncertain, meaning its
occurrence or non-occurrence is not guaranteed at the time of the
agreement.
3. **Lawful Object and Consideration**:
Like other contracts, a contingent contract must have a lawful object and
consideration.
4. **Collateral Event**:
The event must be collateral or incidental to the contract. The event itself
is not the primary subject matter of the agreement.
5. **Enforceability**:
A contingent contract becomes enforceable only when the specified
event occurs or does not occur, depending on the terms of the agreement.
### Provisions of the Indian Contract Act Regarding Contingent Contracts
Sections 31 to 36 of the Indian Contract Act deal with contingent contracts
and outline the rules for their validity and enforceability.
#### Section 31: Definition of Contingent Contracts
This section provides the definition of a contingent contract, as mentioned
earlier. It clarifies that the performance of such a contract is conditional
upon the occurrence or non-occurrence of a collateral event.
#### Section 32: Enforcement of Contracts Contingent on Happening of an
Event
According to Section 32, contingent contracts to do or not to do something
upon the happening of an uncertain future event can be enforced only if
and when the event occurs.
- For example, A contracts to sell goods to B if it rains on a particular day. If
it rains, the contract becomes enforceable.
#### Section 33: Enforcement of Contracts Contingent on Non-Happening
of an Event
Section 33 states that contingent contracts to do or not to do something
upon the non-happening of an uncertain future event can be enforced only
if it is certain that the event will not happen.
- For example, A agrees to pay B ₹5,000 if B’s ship does not return from a
voyage. If the ship is lost and does not return, the contract becomes
enforceable.
#### Section 34: When Event on Which Contract is Contingent is
Impossible
If the event on which a contingent contract depends becomes impossible,
the contract becomes void.
- For example, A contracts to pay B a sum of money if a particular ship
reaches the port. If the ship sinks, the contract becomes void.
#### Section 35: Contracts Contingent on the Conduct of a Living Person
If a contract depends on how a person acts or behaves, it can be enforced
only if the person performs the act or refrains from it. If the person’s
conduct makes the performance of the contract impossible, the contract
becomes void.
- For example, A agrees to pay B ₹10,000 if B marries C. If B marries
someone else, the contract becomes void.
#### Section 36: Agreement Contingent on Impossible Events
An agreement contingent upon the happening of an impossible event is
void from the outset, as the event can never occur.
- For example, A agrees to pay B a sum of money if it rains on the moon.
This agreement is void as the event is impossible.
### Essential Rules for Enforceability of Contingent Contracts
1. **Event Must Be Collateral**:
The contract must depend on an event that is collateral to the main
agreement. The event itself cannot be the consideration or object of the
contract.
2. **Uncertain Event**:
The event on which the contract depends must be uncertain at the time of
making the contract. If the event is certain to occur, the contract is not
considered contingent.
3. **Happening or Non-Happening**:
A contingent contract can depend on either the occurrence or
non-occurrence of an event.
4. **Legal Validity**:
The contract must meet all other requirements of a valid contract, such as
free consent, lawful consideration, and a lawful object.
5. **Event Must Not Be Impossible**:
If the event is impossible, the contract is void from the beginning.
### Examples of Contingent Contracts
1. **Happening of an Event**:
A contracts to sell goods to B if B’s ship arrives at the port. This is a
contingent contract and becomes enforceable only when the ship arrives.
2. **Non-Happening of an Event**:
A agrees to pay B ₹5,000 if a certain ship does not return within a year. If
the ship does not return within the specified time, the contract becomes
enforceable.
3. **Conduct of a Person**:
A agrees to pay B a sum of money if B divorces C. If B divorces C, the
contract is enforceable.
4. **Impossible Event**:
A agrees to pay B ₹10,000 if a dead person comes back to life. This
agreement is void as the event is impossible.
### Distinction Between Contingent and Other Types of Contracts
1. **Contingent vs. Absolute Contracts**:
Absolute contracts are unconditional and must be performed regardless
of any external event. Contingent contracts, on the other hand, are
conditional and depend on an uncertain future event.
2. **Contingent vs. Wagering Agreements**:
While contingent contracts are valid and enforceable, wagering
agreements are void under Section 30 of the Act. Wagering agreements
depend purely on chance and involve speculative interests, whereas
contingent contracts are lawful and involve genuine interest in the subject
matter.
### Legal Importance of Contingent Contracts
Contingent contracts play a crucial role in commercial transactions by
allowing parties to manage risks associated with uncertain future events.
They are particularly significant in:
1. **Insurance Contracts**:
Insurance contracts, such as life insurance, fire insurance, and marine
insurance, are contingent contracts as they depend on the occurrence of
specific events.
2. **Indemnity and Guarantee**:
Contracts of indemnity and guarantee often involve contingent
obligations, where the liability arises only if a specific event occurs.
3. **Risk Management**:
Contingent contracts allow businesses to hedge risks by entering
agreements that depend on uncertain events.
### Conclusion
Contingent contracts, as defined under Sections 31 to 36 of the Indian
Contract Act, 1872, provide a mechanism for parties to enter into
agreements based on uncertain future events. These contracts are valid
and enforceable as long as they meet the essential conditions of a valid
contract and the event on which they are based is lawful and possible. By
distinguishing contingent contracts from wagering agreements and other
types of contracts, the law ensures clarity and enforceability, promoting
their use in lawful and practical applications like insurance and indemnity.
