CMA Foundation · Fundamentals of Business Laws and Business Communication · Contingent Contracts
Kiran agrees to pay Lakshmi a sum of money if a certain ship does not return. The ship is later sunk. When can the contract be enforced?
The contract can be enforced when the ship sinks. A contract contingent on an uncertain event not happening becomes enforceable once the happening of that event becomes impossible, and not before. The ship's sinking makes its return impossible.
- AOnly if the ship returns
- BNever, because the event is negative
- CAt the time of the agreement itself
- DWhen the ship sinks, as its return has then become impossible, and not beforeCorrect
Explanation
Section 33 says contingent contracts to do something if an uncertain future event does not happen can be enforced when the happening of that event becomes impossible, and not before. Sinking of the ship makes its return impossible, so enforcement is possible then. Enforcement before that point is not allowed.
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