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

Meera agrees to buy Rohan's machine at Rs 2,00,000 if Sunil, to whom the machine was first offered, refuses to buy it. Sunil has not yet given any answer. Which statement is correct?

The contract cannot be enforced unless and until Sunil refuses to buy the machine. Under Section 32, a contract contingent on an uncertain event happening is unenforceable until that event occurs, and it is not void merely because the event is uncertain.

  1. AThe contract is void because the event is uncertain
  2. BThe contract is enforceable at once because Meera has agreed to the price
  3. CThe contract cannot be enforced unless and until Sunil refuses to buy the machineCorrect
  4. DThe contract is enforceable only if Sunil accepts the machine

Explanation

This matches the horse illustration in Section 32. The contract depends on an uncertain future event, Sunil's refusal, and cannot be enforced until that refusal occurs. Acceptance by Sunil would make the event impossible, not enforceable.

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