Contingent Contracts: formula sheet

Key formulas

Definition (Section 31)

Contingent contract = contract to do or not do something + if a collateral event happens or does not happen

Both parts must be present. Learn the words 'collateral' and 'uncertain'.

Essentials

1. Contract; 2. Performance depends on an event; 3. Event is collateral; 4. Event is uncertain

These four come from the Section 31 definition. Separately, a general contract-law point: a promise that depends wholly on the promisor's wish, such as 'I will pay if I wish', is illusory because it lacks consideration or intention. That is not a Section 31 requirement.

Validity

Contingent contract is valid if the Section 10 conditions are met

Free consent, competent parties, lawful consideration and object, and not expressly declared void.

Contingent vs wager

Wager: mutual promises to pay depend solely on the uncertain event, and neither party has any other interest. Contingent: the event is collateral and the contract has independent reciprocal promises

A real interest in the event is a typical feature of a contingent contract, but it is not the conclusive test. Insurance is contingent. A bet on a match result is a wager, and a wager is void.

Enforceability

Contingent contract cannot be enforced until the event happens

If the event becomes impossible, the contract becomes void. This is covered in Sections 32 to 36.

Rule of enforcement (Section 32)

Event not yet happened → enforcement suspended; the contract cannot be enforced by law until the event happens

The contract is valid when made, but performance cannot be demanded until the uncertain event happens. This is not the same as void.

Rule of voidness (Section 32)

Event becomes impossible → contract becomes void

A contract is void when it ceases to be enforceable by law (Section 2(j)). Impossibility is judged by what happens after the contract is made.

Meaning of contingent contract (Section 31)

Contingent contract = promise to do or not do something if a collateral event does or does not happen

The event must be uncertain and collateral to the contract.

Test for Section 32

Promise depends on an event HAPPENING → Section 32

If it depends on an event NOT happening, the case belongs to a different section.

Section 33 rule

Contract to be performed if an uncertain event does not happen → enforceable when the happening of that event becomes impossible

Not enforceable while the event is still possible.

Section 32 rule (for contrast)

Contract to be performed if an uncertain event happens → enforceable only after the event happens; void if the event becomes impossible

Section 32 is about the event happening; Section 33 is about the event not happening.

Meaning of contingent contract (Section 31)

Contract to do or not to do something if an event, collateral to the contract, does or does not happen

The event is collateral, meaning not the main promise itself, and the contract depends on it. Uncertainty is an accepted feature of the event, not statutory wording.

Rule of Section 34

Event depends on a living person's future conduct + that person does anything which renders it impossible that the event should happen within any definite time, or otherwise than on further contingencies → event deemed impossible

Once the event is deemed impossible, the contract contingent on its happening becomes void under Section 32.

Test of further contingencies

Act renders it impossible that the event should happen within any definite time, or otherwise than on further contingencies → deemed impossible

The rule has two alternative limbs. In the marriage illustration, the event could now happen only on a further uncertain event, so it does not stay alive.

Classic illustration

A pays B if B marries C; C marries D → B marrying C deemed impossible → contract void

Remember it even if D later dies, the event stays deemed impossible.

Event to happen within fixed time

Event does not happen in time, or becomes impossible → contract void

If the event happens within the time, the contract is enforceable.

Event not to happen within fixed time

Time expires without the event, or event becomes certain not to happen → contract enforceable

The duty arises only when the event can no longer happen. Section 35 itself states only the enforceable result. If the event happens within the time, the contract cannot be enforced. That result comes from Section 33, not from the text of Section 35.

Key test

Check: type (happens / not happens) + time + possibility of event

These three facts decide every Section 35 question.

Section 36 rule

Agreement contingent on an impossible event = VOID

Applies whether or not the parties knew of the impossibility when making the agreement.

Test of impossibility

Event is impossible in itself → Section 36 applies (void)

The statutory example is an event impossible in nature, such as two straight lines enclosing a space.

Effect on parties

Void agreement → no enforceable rights or duties

Neither party can sue the other for performance.

Contrast with Sections 32 and 33

Possible but uncertain event = valid contingent contract; event impossible in itself = void agreement under Section 36

Section 32 deals with an event happening and Section 33 with an event not happening. If the event later becomes impossible, a Section 32 contract becomes void, while a Section 33 contract becomes enforceable.

Quick revision

• A contingent contract depends on an uncertain event collateral to the contract (Section 31).
• The event must be uncertain and in the future. It must be collateral: it must not be the performance of the contract itself or part of the consideration (the reciprocal promises) of the contract.
• Insurance and indemnity-type promises are common examples of contingent contracts.
• Section 32: contract contingent on an event happening cannot be enforced until the event happens.
• Under Section 32, the contract becomes void when the event becomes impossible.
• Section 33: contract contingent on an event not happening can be enforced only when the happening of that event becomes impossible, and not before.
• Section 34: when the event is the way a living person will act at an unspecified time, it becomes impossible when that person does anything that makes it impossible that he will so act within any definite time, or otherwise than under further contingencies. Example: A agrees to pay B if B marries C. C marries D, so the event becomes impossible.
• Section 35 (event to happen within a fixed time): the contract becomes void if the time expires without the event happening, or if before the time expires the event becomes impossible.
• Section 35 (event not to happen within a fixed time): the contract can be enforced by law when the time expires without the event happening, or before the time expires if it becomes certain that the event will not happen.
• Section 36: contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the impossibility is known or not to the parties when the agreement is made.
• Always ask: what is the uncertain event, and has it happened or become impossible?

Common mistakes

• Treating the event as part of the main promise. Fix: Ask whether the event is outside the exchange of promises. It must be collateral.
• Calling a wager a contingent contract because it also depends on an uncertain event. Fix: Check whether the event is collateral. In a wager, mutual promises to pay depend solely on the event and neither party has any other interest. A contingent contract has independent reciprocal promises. Real interest is a typical sign, not a conclusive test.
• Saying the contract is void as soon as it is made because the event is uncertain. Fix: A contingent contract is valid when made. Only enforcement waits for the event.
• Saying the contract is void while the event has just not happened yet. Fix: Void applies only when the event becomes impossible. Until then enforcement is only suspended.
• Mixing up Section 32 and Section 33. Fix: Remember: 32 = event happens; 33 = event does not happen. Check the condition wording first.
• Saying the contract is void when the event becomes impossible. Fix: Under Section 33, impossibility of the event makes the contract enforceable, not void.
• Saying the event is possible because the person may still change their mind or another event may occur later. Fix: Remember the words 'further contingencies'. If the event can happen only on one, it is deemed impossible.
• Confusing Section 34 with Section 32 or Section 33. Fix: Section 32: contract contingent on an event happening. Section 33: contract contingent on an event not happening. Section 34: when an event depending on a living person's future conduct is deemed impossible. It applies to both kinds of contract. The result is void under Section 32 if the contract depends on the event happening, and enforceable under Section 33 if it depends on the event not happening.
• Treating all failed events as making the contract void. Fix: Check the type first. For a 'not happening' contract, the failure of the event makes the contract enforceable.
• Ignoring the time limit and waiting for the event indefinitely. Fix: Mark the deadline. After it passes, apply the rule at once.

Exam tips

• Learn the Section 31 definition with its key words: collateral and uncertain.
• Contracts of insurance, indemnity and guarantee are commonly cited examples of contingent contracts. In life insurance, the uncertainty lies in the time of death.
• If options include 'void', check whether the facts describe a wager or a valid contingent promise.
• Do not confuse Section 31 with Sections 32 to 36, which set out when contingent contracts are enforced.
• If unsure, check the facts in the question against the definition: is there a conditional promise, and is the event collateral and uncertain?
• Most MCQs give a short story. Underline the event and ask whether it has happened, not happened yet, or become impossible.
• Learn the two outcomes by heart: not enforceable until the event, void when the event becomes impossible.
• Do not pick illegal or voidable unless the facts clearly show unlawful purpose or defective consent.