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

Meera promises to pay Rohan Rs. 50,000 if a particular cargo vessel reaches Kochi port within six months. Under Section 35 of the Indian Contract Act, 1872, when does this contingent contract become void?

The contract becomes void if the vessel has not reached Kochi when the six months expire, or if before then its arrival becomes impossible. Section 35 treats both expiry of time without the event and earlier impossibility of the event as grounds for voidness.

  1. AOnly if the vessel reaches Kochi after six months have passed by a single day
  2. BIf, at the end of six months, the vessel has not reached Kochi, or if before that time its arrival becomes impossibleCorrect
  3. COnly if Meera changes her mind before six months end
  4. DImmediately on formation, because the event is uncertain

Explanation

Section 35 says a contract contingent on an uncertain event happening within a fixed time becomes void if the time expires without the event, or if before then the event becomes impossible. The first option is too narrow and describes only part of the rule. Uncertainty of the event does not make the contract void at formation; it is what makes the contract contingent.

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