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

Kiran Textiles agrees to buy 500 bales of cotton from Ravi Traders at a fixed price, but only if a particular import consignment arriving at Mundra port is cleared by customs. The consignment has not yet been cleared. Under Section 32 of the Indian Contract Act, 1872, what is the position of this contract?

The contract cannot be enforced unless and until the customs clearance occurs. Section 32 makes a contingent contract dependent on an uncertain future event unenforceable until that event happens. It is not void merely because the event is uncertain; it becomes void only if the event becomes impossible.

  1. AIt is enforceable immediately because the parties have consented
  2. BIt cannot be enforced unless and until the customs clearance happensCorrect
  3. CIt is void from the beginning because the event is uncertain
  4. DIt is voidable at the option of Ravi Traders

Explanation

Section 32 says a contract contingent on an uncertain future event happening cannot be enforced by law unless and until that event happens. Customs clearance has not happened, so enforcement must wait. Uncertainty of the event does not make the contract void; it is void only if the event becomes impossible.

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