CMA Foundation · Fundamentals of Business Laws and Business Communication · Contingent Contracts
Arun promises to pay Bina Rs. 20,000 if a specified vessel does not return within one year. Eight months later the vessel is burnt and destroyed. What is the legal position?
The contract may be enforced now. Under Section 35, where a contract depends on an event not happening within a fixed time, enforcement is allowed once it becomes certain the event will not happen, even before the time expires. The burning settles this.
- AThe contract is void because the vessel can no longer return
- BThe contract may be enforced now, as it has become certain the vessel will not return within the yearCorrect
- CThe contract can be enforced only after the one year has expired
- DThe contract is enforceable only if Bina proves the vessel did not return
Explanation
Section 35 provides that a contract contingent on an event not happening within a fixed time may be enforced when the time has expired without the event, or earlier if it becomes certain the event will not happen. The burning makes the return certain not to happen, so Bina may enforce now. Option 3 ignores this earlier-enforcement rule.
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