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. 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. • 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. 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. • 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. • 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. 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. 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. 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. • 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. 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.
