Basing on the presence or absence of Conditions, Contracts can be classified into two groups namely; Absolute Contracts and Contingent Contracts. In case where there is no condition, it is called Absolute Contract. As there is no condition, absolute contract is to be performed under all circumstances.
In case where there is condition, then such contract is called Contingent Contract. Therefore Contingent Contract means Conditional Contract. When imposed and condition is fulfilled, the Contingent Contract becomes valid and then parties have to perform their obligations. If imposed and Condition is not fulfilled, the Contingent Contract become Void and then it need not be performed. So Contingent Contract is to be performed under some circumstances only.
Depending Upon Happening of an Uncertain Event: Sometimes Contingent Contract depends upon happening of uncertain event. Then if such uncertain event takes place, the Contingent Contract becomes valid and if that uncertain event does not take place, the Contingent Contract is Void.
Depending upon non-happening of an uncertain event: At times the Contingent Contract may depend upon non-happening of uncertain event. Then if that event does not happen, the Contract is Valid and if that event takes place, the contract is void.
Depending upon happening of an Uncertain event in a fixed period: At times Contingent Contract may depend upon happening of uncertain event in a fixed period. If such event happens within fixed period, the contract is Valid. If such event does not take place with in fixed period, the contract is void.
Depending upon non-happening of an uncertain event in a fixed period: At times the Contingent Contract may depend upon non-happening of uncertain event in a fixed period then if such event place within that fixed period, the contract is void and if that event does not takes place within agreed period, then it is valid.
Depending upon an Impossible Event: Sometimes the Contingent Contract may depend upon impossible event. Such a type of Contingent Contract is abinitio void.
In case where there is condition, then such contract is called Contingent Contract. Therefore Contingent Contract means Conditional Contract. When imposed and condition is fulfilled, the Contingent Contract becomes valid and then parties have to perform their obligations. If imposed and Condition is not fulfilled, the Contingent Contract become Void and then it need not be performed. So Contingent Contract is to be performed under some circumstances only.
- Example: There is a Contract between A and B according to which A has to sell his goods which are in voyage, to B if the ship reaches the harbor safely. Here condition can be seen and it is Contingent Contract. All indemnity contracts, guarantee contracts and insurance contracts are Contingent Contracts. According to Sec. 31 of Indian Contracts Act, a Contract performance of which depends upon happening or non happening of an un-certain event is called Contingent Contract.
Types of Contingent Contracts
Depending Upon Happening of an Uncertain Event: Sometimes Contingent Contract depends upon happening of uncertain event. Then if such uncertain event takes place, the Contingent Contract becomes valid and if that uncertain event does not take place, the Contingent Contract is Void.
- Example: According to Contract formed between A and B, A has to sell goods to B, if ship comes there safely, their Contract is valid and if the ship gets drowned, their Contract is void.
Depending upon non-happening of an uncertain event: At times the Contingent Contract may depend upon non-happening of uncertain event. Then if that event does not happen, the Contract is Valid and if that event takes place, the contract is void.
- Example: There is a contract between A and B according to which A has to sell goods to B, if the ship does not come back. Here, if the ship come back, the Contract is void and if the ship gets drowned away, then it is valid.
Depending upon happening of an Uncertain event in a fixed period: At times Contingent Contract may depend upon happening of uncertain event in a fixed period. If such event happens within fixed period, the contract is Valid. If such event does not take place with in fixed period, the contract is void.
- Example: As per the contract formed between A and B, A has to sell goods to B, if the ship comes back within 10 days. If it comes on 8th day (or) 9th day, the contract is valid and if it comes back on 12th day (or) 13th day, the contract is void.
Depending upon non-happening of an uncertain event in a fixed period: At times the Contingent Contract may depend upon non-happening of uncertain event in a fixed period then if such event place within that fixed period, the contract is void and if that event does not takes place within agreed period, then it is valid.
- Example: A has to sell goods to B if the ship does not come back within 10 days. If it comes on 8th day (or) 9th day, the contract is void and if it comes back on 12th day (or) 13th Day, the contract is valid.
Depending upon an Impossible Event: Sometimes the Contingent Contract may depend upon impossible event. Such a type of Contingent Contract is abinitio void.
- Example: there is a contract between A and B where A will pay Rs.100000/- to B if B marry C. Assume that C was dead 5 years ago, now element of impossibility can be seen and their contract is abinitio void.
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ReplyDeleteNice one and easy to understand, I got it.
ReplyDeletevery nice.....
ReplyDeleteVery nice nd very easy to understand
ReplyDeleteGreat work keep it up
A bought a horse from B and said he would pay 2000 if the horse proved lucky is this a contingent comtract
ReplyDeleteYes.....though it would be wagering agreement if u get 2000 when horse proved unlucky
DeleteRoshni .... It depend whether a contigent contract is valid or void...cause it can ve both.. Depend on possibility of uncertain event and legality of main contract...
DeleteIt is easy to understand and rebember
ReplyDeletemuch clearly explained with examples.
ReplyDeleteContingent contract is void, Voidable, valid or illegal?????
ReplyDeleteContingent contract are always ..?
ReplyDeleteIt is very easy to understand.Tnq for providing.
ReplyDeleteAsim agreed to construct a bungalow for Ali at Rs. 50 million. However, it was
ReplyDeleteagreed that payment would only be made upon completion of the project.
is this a contigent contract