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

Kapoor Builders agrees to pay Rs. 5,00,000 to Iyer Consultants if a specified municipal approval is granted to a project. The approval is rejected finally and cannot now be granted. Iyer demands payment. What is the position?

The contract becomes void. A contract contingent on an uncertain event happening cannot be enforced until the event occurs, and if the event becomes impossible, as here with the final rejection of approval, the contract is void and Iyer cannot claim payment.

  1. AIyer can enforce the contract after one year
  2. BKapoor must pay, because the contract was validly formed
  3. CThe contract can be enforced once Kapoor consents
  4. DThe contract becomes void, because the event has become impossibleCorrect

Explanation

Under section 32, a contract contingent on an event happening cannot be enforced unless and until the event happens, and if the event becomes impossible the contract becomes void. Since the approval can no longer be granted, the contract is void, so no payment is due.

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