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Contingent Contract.pptx

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Contingent Contract.pptx

  1. 1. Contingent Contract
  2. 2. Contingent Contract-Section 31 • According to the section 31 of the contract Act 1872, “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.” • Contingent Contract is a contract in which a promise is conditional and the contract shall be perform only on the happening or not happening of some future uncertain event.(Contract of Insurance, Guarantee) • Eg : • A contracts to pay B Rs.10,000 if B’s house is burnt. This is a contingent contract.
  3. 3. Rules regarding contingent contract • Where the performance of a contingent depends on the happening of an uncertain future event, it cannot be enforced till the event takes place. • And if the happening of the event becomes impossible, such contracts become void (sec. 32). • Example- A contracts to sell B a piece of land if he (A) wins the legal case involving that piece of land. A loses the case. The contract becomes void.
  4. 4. • Peter enters into a contract with John and promises to deliver 5 television sets to him. John promises to pay him Rs 75,000 upon delivery. • This is NOT a contingent contract since John’s obligation depends on the event which is a part of the contract (delivery of TV sets) and not a collateral event. • Peter enters into a contract with John and promises to deliver 5 television sets to him if Brazil wins the FIFA World Cup provided John pays him Rs 25,000 before the World Cup kicks-off. • This is a contingent contract since Peter’s obligation arises only when Brazil wins the Cup which is a collateral event.
  5. 5. Rules regarding Contingent contract • Where the performance of a contingent contract depends on the non-happening of a future event, the contract can be enforced if the happening becomes impossible (sec. 33). • Example- A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk. The contract can be enforced when the ship sinks. • If the contract is dependent on the manner in which a person will act at an unspecified time, the event shall be considered to become impossible when such person does anything which makes it impossible that he should so act within any definite time or otherwise than under further contingencies (sec. 34). • A agrees to pay B a sum of money if B marries C, C marries D. The marriage of B to C must now be considered impossible, although it is possible that D may die and that C may afterwards marry B.
  6. 6. • Contingent contract to do or not to do anything, if a specified uncertain event happens within a fixed time, becomes void if the event does not happen and the time expires or its happening becomes impossible before the time expires [sec. 35] • (a) A promises to pay B a sum of money if a certain ship returns 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. • (b) 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 the year.
  7. 7. • If A agrees to sell 10 bags of cement to B and B agrees to pay the price at delivery of Goods… • Is this a contingent Contract? • A contract in which A promises to pay B a fixed sum of money on the death of C. • A agrees to deliver to B a certain quantity of cement if the government lifts the ban on free trading of Cement. • Is this a Contingent Contract?
  8. 8. Essentials of a Contingent Contract.. • There are three essential characteristics of a contingent contract: • Its performance depends upon the happening or non- happening in future of some event. It is this dependence on a future event which distinguishes a contingent contract from other contracts. • The event must be uncertain. If the event is bound to happen, and the contract has got to be performed in any case it is not a contingent contract. • The event must be collateral, i.e. incidental to the contract.
  9. 9. Landmark judgements • Balfour vs Balfour • Mr. Balfour- a civil engineer by profession- is the appellant in the present case. He used to live with his wife in Ceylon, Sri Lanka. During his vacations in the year 1915, they came to England. But on his return, Mrs. Balfour had developed a disease rheumatic arthritis. She was advised by her doctor to stay in England as a jungle climate would be detrimental to her health. As Mr. Balfour’s boat was about to set sail, he promised her £30 a month until she came back to Ceylon. Mr. Balfour continued to send the money to her wife in England for some time but subsequently, he stopped. In March 1918, Mrs. Balfour sued him to keep up with the monthly £30 payments. • Here,she could not recover it as it was a social agreement and the parties did not create legal relations.
  10. 10. TaylorvLaird(FORMATIONOFCONTRACT–ACCEPTANCE INIGNORANCEOFANOFFER) • Facts • The claimant was employed as the captain of a ship which was owned by the defendants. Whilst in a foreign port during the course of the voyage, he voluntarily gave up his position as captain, and worked as an ordinary crew member during his passage back to Britain. • The defendant was not made aware of this change of position. • Upon his return, he sought to claim wages from the defendant for his work as a crew member during this journey.
  11. 11. • Issue • The issue was whether the defendant had accepted the claimant’s offer of work despite being unaware of it, and by extension whether the defendant was contractually bound to pay the claimant’s wages for his work on the ship during the return journey.
  12. 12. Held • The court held that the claimant was not entitled to wages for the return journey on the basis that he had not entered into any contractual agreement with the defendant for the performance of his work as an ordinary crew member. • The defendant had not received any communication or offer of work in this capacity from the claimant, and there was therefore no basis for a contract. The court reasoned that it would be unjust to hold a party bound by an offer which he had not been made aware of, and therefore had no opportunity to accept or reject.
  13. 13. Thank You

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