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CS Professional · Drafting, Pleadings and Appearances · Drafting of Commercial Contracts

Anand Pharma drafts a clause promising to pay Kiran Logistics Rs 2 lakh if a specified licence is granted to it within six months. At the end of six months the licence has not been granted. What is the legal position of the clause under the Indian Contract Act, 1872?

The contract becomes void. Under the Contract Act, a contingent contract tied to an event happening within a fixed time becomes void if that time expires and the event has not happened, so a later grant of the licence does not revive it.

  1. AThe contract becomes void because the event has not happened within the fixed timeCorrect
  2. BThe contract is enforceable because the event did not happen
  3. CThe contract is enforceable only after the licence is eventually granted
  4. DThe contract is voidable at the option of Kiran Logistics

Explanation

A contract contingent on a specified uncertain event happening within a fixed time becomes void if the time expires without the event happening. A later grant does not revive it. It is not voidable; the Act states it becomes void.

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