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CSEET · Business Laws and Management · Elements of Law of Contracts

Anil promises to pay Bina Rs. 20,000 if a certain ship returns within a year. The ship is burnt within the year. Which statement is correct?

The contract becomes void. Where a contract depends on an uncertain event happening within a fixed time and that event becomes impossible before the time ends, such as the ship being burnt, the contract becomes void under Section 35.

  1. AThe contract may be enforced after the year ends
  2. BThe contract becomes void as the event has become impossible before the time fixedCorrect
  3. CThe contract is enforceable because the ship did not return
  4. DThe contract is void ab initio because it is contingent

Explanation

Section 35 and illustration (a): where the event is to happen within a fixed time and before the time fixed it becomes impossible, the contract becomes void. It was valid when made, so it is not void ab initio. Non-return does not make the promise enforceable since the promise depended on return.

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