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

Karan agrees to pay Dev Rs. 30,000 if the Reserve Bank of India's repo rate is cut within six months. The six months expire and no cut has happened. Which statement is correct?

The contract becomes void. It depends on a rate cut happening within six months, and under Section 35 such a contract becomes void when the time fixed expires without the event happening. The event's uncertainty does not make it void from the start.

  1. AThe contract becomes void because the event has not happened at the expiration of the time fixedCorrect
  2. BThe contract is enforceable because the event did not happen
  3. CThe contract is enforceable after a further six months
  4. DThe contract is void from the beginning because the event is uncertain

Explanation

This is a contract contingent on an uncertain event happening within a fixed time. Section 35 provides that it becomes void if, at expiry of the time, the event has not happened. Uncertainty of the event is what makes it contingent, not a ground for voidness.

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