CMA Foundation · Fundamentals of Business Laws and Business Communication

Contingent Contracts: Sections 31 to 36 for CMA Foundation

A contingent contract is a contract to do or not do something if some uncertain event, collateral to the contract, does or does not happen. Section 31 defines it. To solve MCQs, find the uncertain event, check whether it must happen or not happen, then apply Sections 32 to 36.

What this chapter covers

This chapter covers a short set of rules in the Indian Contract Act, 1872, from Section 31 to Section 36. It deals with contracts where a promise depends on something uncertain. A common example is insurance: the insurer pays only if the loss occurs. The chapter is small, but each section has one clear rule.

The chapter builds on what you learn earlier in the paper: offer, acceptance, consideration and the difference between void and valid agreements. A contingent contract is still a contract. The only special feature is that performance depends on a future uncertain event. Keep that link in mind and the rules become easy to remember.

It also connects to later chapters. Ideas like indemnity, guarantee and insurance-style contracts use the same logic of 'if something happens, then I must perform'. Learning this chapter well gives you a base for those topics.

Paper 1 is fully objective, with 50 MCQs of 2 marks each and no negative marking. Contingent contracts are a compact chapter with definite rules, so questions are usually direct and you can answer them fast once the rules are clear. The effort is small compared with larger chapters, and the rules are easy to test with short scenarios. Getting these questions right protects your score in a paper where you need at least 40% to pass, along with 50% in aggregate.

Contingent Contracts: topics in the order to study them

1Contingent Contract: Meaning and Essentials (Section 31)Start here because every other section uses this definition, especially the idea that the event is uncertain and collateral.
2Contracts Contingent on an Event Happening (Section 32)This is the basic case. Such a contract cannot be enforced until the event happens, and it becomes void if the event becomes impossible.
3Contracts Contingent on an Event Not Happening (Section 33)It is the mirror image of Section 32, so learn it straight after for easy comparison.
4Future Conduct of a Living Person (Section 34)It covers the special case where the event is how a living person will act at an unspecified time, and it states when that event is treated as impossible.
5Contingent Events within a Fixed Time (Section 35)It adds a time limit to the earlier rules, for both events that must happen and events that must not happen, so you need Sections 32 and 33 first.
6Agreements Contingent on Impossible Events (Section 36)It is the last rule and a short one: such agreements are void, so you can finish with it and then practise mixed questions.

How to prepare Contingent Contracts

This chapter is short, so aim to master the rules and then spend most of your time on scenario MCQs.

Read Section 31 and write the definition in your own words. Underline three ideas: future, uncertain, and collateral to the contract.
Learn Sections 32 and 33 as a pair. For each, note when the contract becomes enforceable and when it becomes void.
Study Section 34 and Section 35 with the time element. Ask in each case: has the event happened, become impossible, or has the time run out? For Section 35, also check whether the event was to happen or not to happen within the time.
Learn Section 36 as a one-line rule: contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the impossibility of the event is known or not to the parties when the agreement is made. Example: 'I will pay you ₹10,000 if two straight lines enclose a space.' The event is impossible, so the agreement is void.
Make a small table on paper with the section number, the type of event and the result. Use it for quick revision.
Solve scenario MCQs by first spotting the uncertain event, then the section, then the result. Time yourself at about one minute per question.
Revise by distinguishing contingent contracts from wagering agreements and ordinary contracts whenever you see them in questions.

Common mistakes in Contingent Contracts

Treating any conditional promise as a contingent contract
Fix: Check that the event is uncertain, in the future and collateral to the contract. Collateral means the event is neither the performance of the contract nor part of its consideration, that is, not one of the reciprocal promises themselves. If the condition is part of what each party promises, it is not a contingent event.
Mixing up Sections 32 and 33
Fix: Remember 32 is event happening and 33 is event not happening. Link each section to its trigger: happen means wait until it happens, not happen means it is enforceable when the event becomes impossible.
Applying only the 'void' limb of Section 35 and ignoring the time limit
Fix: Check whether the event was to happen or not to happen within the time. If it was to happen and the time expires without it, the contract is void. If it was not to happen and the time expires without it, or before the time expires it becomes certain it will not happen, the contract can be enforced.
Saying the contract is void as soon as the event has not happened yet
Fix: A contract stays alive while the event is still possible. A Section 32 contract becomes void when the event becomes impossible. Where the event was to happen within a fixed time, Section 35 makes the contract void when the time expires without the event happening, or when the event becomes impossible before then.
Thinking a contingent contract is not a valid contract
Fix: It is a valid contract with all essentials. Only performance waits for the event.
Confusing contingent contracts with wagering agreements
Fix: In a wagering agreement (Section 30, void), each party stands to win or lose depending on the uncertain event, and that event is the whole basis of the agreement, not something collateral to it. In a contingent contract the event is collateral to the contract, and the contract is valid. Do not treat every bet-like scenario as the same thing.

Last-day revision: Contingent Contracts

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?

Contingent Contracts practice questions

Contingent Contracts in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Contingent Contracts: frequently asked questions

What is a contingent contract under Section 31?

It is a contract to do or not to do something if some event, collateral to the contract, does or does not happen. The event must be uncertain. Insurance is a standard example.

How many MCQs can I expect from Contingent Contracts?

ICMAI does not publish a fixed number for each chapter, so plan for a few direct questions. Because the chapter is short, it is worth learning fully.

Is Section 36 hard to remember?

No. It has one rule: a contingent agreement to do or not do anything, if an impossible event happens, is void. It does not matter whether the parties knew of the impossibility when they made it. Link it to the idea that nobody can be bound to something that cannot happen.

How long should I spend on this chapter?

A short chapter like this can be covered in a few focused sessions. Spend time on the rules first and then on practising scenario-based MCQs.