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CA Foundation · Business Laws · The Indian Contract Act, 1872

Anil agrees to pay Bhavna Rs 50,000 if her ship, which is currently at sea, returns safely to Mumbai port by 31 March. The ship sinks in February. Which statement is correct?

Anil need not pay. The agreement is a contingent contract, enforceable only if the ship returns safely by the stated date. Once the ship sinks, that event becomes impossible, so the contract becomes void and neither party can enforce it. Contingent contracts are not void merely by being contingent.

  1. AAnil must still pay because the contract was valid when made
  2. BAnil need not pay because the contingent event became impossible, so the contract cannot be enforcedCorrect
  3. CAnil must pay half the amount as compensation
  4. DAnil need not pay because contingent contracts are void by nature

Explanation

This is a contingent contract: payment depends on an uncertain future event, the ship returning safely. When the ship sinks, the event becomes impossible, and the contract becomes void. Option A ignores that enforcement depends on the event happening.

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