A Contingent Contract Is Also Known as Conditional Contract

There is a difference between a contractual agreement and a conditional contract, since a contractually agreed agreement is not a contract at all. In a contractual agreement, the parties are not bound by the contract until a formal contract is concluded between the parties and this contract is concluded by the will of the parties. A contract is only concluded when an uncertain event occurs. However, in the event of a possible event, the performance of the obligation will be suspended until the occurrence or non-occurrence of the event. For example, if X and Y agree to enter into a contract if Y`s house is set on fire, this will be considered a contractual agreement. A contract can be unconditional or absolute on the one hand and conditional or dependent on the other. The absolute or unconditional contract is without reservations or conditions and must be fulfilled in all cases. On the other hand, a conditional or conditional contract is a contract where a promise is conditional and the contract is only fulfilled if an uncertain future event occurs or does not occur. The event must be part of the contract.

The condition can be suspensive or retrospective. For example, goods are sent after approval, the contract is a conditional contract, depending on the buyer`s act of accepting or rejecting the goods. The contract depends on the non-occurrence of an event – In the case of a conditional contract based on the non-occurrence of an uncertain future event, the promisor is responsible for its execution if the event does not occur. If the specified event occurs, the contract becomes invalid. The performance of a conditional contract depends on the occurrence or non-occurrence of a particular event or condition. The condition can be suspensive or retrospective. Example: A promises B to pay a sum of 1000 if it rains on the first of the following month. In the case of a conditional contract, the performance of the promisor depends on compliance with certain conditions. These contracts constitute an obligation on the part of the promisor only if the conditions accompanying the contract are met. All betting contracts are conditional contracts, but not all conditional contracts include betting. A conditional contract contains a conditional commitment.

A promise is “absolute” or “unconditional” if the promise undertakes to fulfill it in all cases. A commitment is “conditional” if the service is due only if a direct and safety-compliant service, dose or non-compliance takes place. “Collateral” means “subordinate, but from the same source, connected but off the main line”. For example, making money depends on finding a well-paying job. Illustration: Saurbh promises to pay Servesh if a particular ship returns within a year. The contract expires if the ship is burned within one year. A contract is considered a conditional contract only if the specified event is a future event that may or may not occur. Article 31: A conditional contract is a contract to do or not to do something if an event, a guarantee for such a contract occurs or not. Example: A orders B to pay 50,000 rupees if B`s house is burned. With this type of contract, the contract already exists, but the performance of the contract depends on a specific event. In this definition, “security” means secondary.

The side event in Pollock and Mulla is defined as “an event that is neither a performance directly promised under the contract nor the entire consideration for a promise. Example: A asks B to pay a sum of 5,000 rupees if the cricket bat is broken by B. It can be said that this is a conditional contract. The breakage of B`s racket is neither a service promised under the contract, nor the consideration received from B. A`s liability arises only with the occurrence of the incidental event. Insurance, indemnity and guarantee contracts fall into this category. Components of conditional contracts A betting agreement is an invalid agreement, but a conditional contract is a valid contract. There are three essential characteristics of a conditional contract: the performance of such a contract depends on the eventuality, and this eventuality is uncertain.

The criterion for determining whether the contract is conditional or not is uncertainty. If the possibility is certain, it is not a conditional contract. A: There are certain essential conditions for the performance of a conditional contract. These are also different types of conditional contracts. The conditional contract deals with the performance of the contract through performance. A conditional contract is also called a conditional contract if the condition is uncertain. These contracts contrast with absolute contracts. An absolute contract exists when there are no conditions and the performance of the contract is secure.

“Conditional contracts” are defined in section 31 of the Indian Contract Act 1872. Example: X signs a contract with Y to pay him 10,000 rupees if the books are delivered to him before Friday. In this case, delivery before Friday constitutes a guarantee for the contract and is not part of the consideration. It is therefore a conditional contract. There are certain situations in which the conditional contract can be performed. If the parties reach an agreement to perform an impossible action, it will not be a conditional event. For example, if A makes an agreement with B that he will pay 10,000 rupees to B, if B brings C back to life, it is not a conditional contract and is invalid. In the case of a conditional contract, the main problem is that the occurrence or non-occurrence of an uncertain event is assumed, not the occurrence or non-occurrence of an impossible event. The “possibility” of an event is very important in a conditional contract, but this element is lacking in the case of impossible actions.

Example of a conditional contract: A promises to pay B a sum of 20,000 rupees if his house is damaged by a fire. The payment of the amount depends on the fact that the house is destroyed by fire. If there is no fire, B cannot claim the amount from A, which is not payable because the fire that was the secondary condition did not occur. Simply put, conditional contracts are those where the promisor fulfills his obligation only when certain conditions are met. Insurance, indemnity and guarantee contracts are some examples of conditional contracts. Contracts dependent on the occurrence of an uncertain event: These contracts become valid only when the uncertain event specified in the contract occurs. For example, suppose A and B enter into a contract in which A promises to sell its goods to B in transit, provided that the goods reach the port safely. Since the sale of goods by A is subject to a condition (that the goods reach the port), this is a conditional contract. If the ship does not arrive at port, the contract expires. Contracts that depend on the non-occurrence of an uncertain event within a certain period of time: for example, say, A commission to sell the goods in transit to B if the ship carrying the goods does not reach the port within eight days. Then the contract becomes invalid if the ship arrives on the sixth day or some time before eight days. If, on the other hand, the vessel comes only after eight days, the contract is concluded; it doesn`t matter if it comes after the eighth day or not.

Illustration: – A payment contract at B Rs. 20,000 if B`s house is burned. It is a quota. A conditional contract is only considered effective if an event occurs or does not occur and serves as collateral for the contract. What is referred to in this section as a “Conditional Contract” is known in English law as a “Conditional Contract”. For a conditional contract, there is a specific event that must be fulfilled. The terms of these contracts are secure and depend on the occurrence or non-occurrence of a future event. A conditional contract is based on the occurrence or non-occurrence of an event. This event must be part of the contract and not part of the consideration specified in the contract. Contingency must be an independent event. Case Law: The defendant promised to marry the plaintiff after the death of his father.

When his father was still alive, he married another woman. It was found that it had become impossible for him to marry the plaintiff and that she had the right to sue him for breach of contract. A contract that depends or depends on the occurrence or non-occurrence of an event is called a conditional contract. Insurance contracts are good examples of conditional contracts where the insurance company is only required to compensate the policyholder if a specific future event (accident, hospitalization, etc.) occurs. .

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