Meaning of contingent contract
- A 'contingent contract' is a contract to do or not do something.
- if some event, collateral to such contract
- does or does not happen
Essential features of a contingent contract-
• It is a contract to do or not to do something
• This contract is dependent on the happening or non-happening of an event
• Such an event is a collateral event, i.e., it is collateral to the contract. i.e., the event must not depend upon the mere will of of a party.
• The event is uncertain.
There are some rules regarding Contingent Contracts.
A = when can be enforced?
B = when does it become void?
Contingent contract upon happening of an event - A) When such event has happened. B) When the happening of such event becomes impossible.
Non-happening of a future event - A) When the happening of such event becomes impossible. B) When such event has happened.
Happening of an event within a specified time - A) When such event has happened within the specified time. B) • When the happening of such event becomes before the expiry of specified time. • When such event has not happened within the specified time.
No -happening of an event within a fixed time- A) • When th happening of such event becomes before the expiry of specified time. • When such event has happened within the specified time. B) When such event has happened within the specified time.
Future conduct of a living person- A) When such person acts in the manner as desired in the contract. B) When such person does anything which makes the desired future conduct of such person.-
• Impossible ; or
• Dependent upon certain contingency
Impossible Events - Such an agreement can't be enforced since it is void. Whether the impossibility of the event was known to the parties or not is immaterial.
A question frequently arises as to what is difference between wagering agreement and contingent contract. As the name clearifies that wagering agreement is not valid on the other hand contingent contract is valid. Wagering agreement is not defined under any section while contingent contract is defined u/s 31. A wagering agreement is a promise to give money or money's worth upon the determination of an uncertain event while 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. Further in a wagering agreement, the uncertain event is the sole determining factor whereas in case of contingent contract, the event is only collateral. A wagering agreement is essentially of contingent nature but a contingent contract may not be of wagering nature.
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