Contingent Contract

Contingent contracts:

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. (sec31)

Illustration: A contracts to pay B Tk 10000, if B’s house is burnt. This is a contingent contract.


Meaning of Contingent Contract:
A contract may be unconditional or absolute on the one hand or conditional or contingent on the other hand. The absolute of unconditional contract is one that has no reservation or conditions and it is to be performed under any event. On the other hand conditional or contingent contract is one in which a promise is conditional and the contract shall be performed only on the happening or not happening of some future uncertain event. The event must be collateral to the contract. The condition may be precedent or subsequent.
The performance of such contract depends on contingency and such contingency is uncertain. If contingency is certain than it is not a contingent contract.

Essential characteristics of contingent contract:
i) There should be existence of contingency, happening or non happening of some events in future.
ii) Contingency must be uncertain
iii) The event must be collateral, incidental to the contract.
Rules regarding contingent contract:
o Contract contingent On happening of some future event (sec32)
Illustration: A makes a contract with B to sell a house to B at a specified price, if C to whom the house has been offered refuses to buy. The contract cannot be enforced by law unless and until C refuses to buy the house

o Contract contingent On non happening of some future uncertain event (sec33)
Illustration: 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 sink.

o Contract contingent On future conduct of a living person (sec34)
Illustration: 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.

o Contract contingent On a specified event happening within a fixed time (sec33(1))
Illustration: A promises to pay B a sum of money if a certain ship returns within a year. The contracts may be enforced if the ship returns within the year, and becomes void if the ship is burnt within a year.

Essential elements of a valid contract.
1. Proposal and acceptance
2. Consideration- lawful consideration with lawful object
3. Capacities of parties to contract-competent parties
4. Free consent
5. An agreement must not be expressly declared to void.
6. Writing and registering if required by law.
7. Legal relationship
8. Certainty
9. Possibility of performance
10. Enforceable by law