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CMA Foundation · Fundamentals of Business Laws and Business Communication · Contingent Contracts

Meera agrees to buy Karan's scooter for Rs. 40,000 if Neha, to whom the scooter was first offered, refuses to buy it. Which statement is correct under Section 32?

The contract can be enforced only after Neha refuses to buy the scooter. Her refusal is the uncertain future event on which the contract depends. Until that happens, neither Meera nor Karan can enforce it, but the contract is not void merely because it depends on a third person.

  1. AThe contract is enforceable at once because Meera has agreed to pay a price
  2. BThe contract is void because it depends on another person's act
  3. CThe contract is enforceable only after Neha refuses to buy the scooterCorrect
  4. DThe contract is voidable at Karan's option until Neha decides

Explanation

This mirrors the horse illustration in Section 32. Neha's refusal is the uncertain event collateral to the contract. Until it happens, the contract cannot be enforced; it is not void merely because it depends on a third party's act.

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