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CMA Foundation · Fundamentals of Business Laws and Business Communication · Discharge of Contracts

Arjun promises to pay Kavita Rs 80,000 if a certain cargo vessel does NOT return to Chennai port within one year. Within the year the vessel is burnt at sea. Which statement is correct?

The contract can be enforced. Where a promise depends on an event not happening within a fixed time, it may be enforced once it becomes certain, even before the time expires, that the event will not happen. The vessel's burning makes its return impossible.

  1. AThe contract becomes void because the vessel can never return
  2. BThe contract can be enforced because it has become certain that the event will not happen within the time fixedCorrect
  3. CThe contract can be enforced only after the full year has expired
  4. DThe contract is voidable at Arjun's option

Explanation

Under Section 35, a contingent contract that depends on an event NOT happening within a fixed time may be enforced if, before the time expires, it becomes certain that the event will not happen. The burning of the vessel makes its return impossible, so enforcement is allowed immediately. Waiting until the year ends is not necessary, so the third option is wrong.

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