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

Meera Textiles promises to pay Rohan Rs 50,000 if a particular cargo ship returns to Mumbai port within one year. Before the year ends, the ship is destroyed in a fire at sea. What is the legal position of the contract?

The contract becomes void. A contingent contract that depends on an event happening within a fixed time becomes void if, before that time expires, the event becomes impossible. Destruction of the ship makes its return impossible, so the promise cannot be enforced.

  1. AIt becomes void because the event has become impossible before the time fixedCorrect
  2. BIt remains enforceable because the year has not yet expired
  3. CIt becomes voidable at the option of Rohan
  4. DIt remains enforceable but only for half the amount

Explanation

Under Section 35, a contingent contract to do something if a specified uncertain event happens within a fixed time becomes void if, before the time fixed, the event becomes impossible. The ship's destruction makes its return impossible, so the contract is void. Waiting for the year to end is not required, which is why the second option is wrong.

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