CMA Foundation · Fundamentals of Business Laws and Business Communication · Contingent Contracts
Kiran agrees to pay Lata Rs. 40,000 if a certain ship returns within a year. Which of the following is the correct application of Section 35?
If the ship is burnt within the year the contract becomes void, and if it returns within the year the contract may be enforced. Section 35 voids a contract contingent on an event happening within a fixed time once that event becomes impossible or time expires.
- AIf the ship is burnt within the year, the contract becomes void, whereas if the ship returns within the year, the contract may be enforcedCorrect
- BIf the ship is burnt within the year, the contract may be enforced against Kiran
- CIf the ship returns after the year, Kiran must still pay because the event eventually happened
- DIf the ship is burnt within the year, Lata may enforce it after waiting for the year to end
Explanation
This follows illustration (a) of Section 35. Return within the year allows enforcement, and burning of the ship within the year makes the event impossible so the contract is void. Enforcement against Kiran after burning would apply only to a contract contingent on the ship not returning. A return after the year is outside the fixed time.
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