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CS Professional · Drafting, Pleadings and Appearances · Commercial Contract Management

Meera Textiles Pvt Ltd agrees to pay Rohan Rs 5,00,000 if Rohan's godown in Surat is damaged by fire. The payment obligation depends on an event that is not a part of the promise itself. How is this contract classified under the Indian Contract Act, 1872?

It is a contingent contract. Under Section 31, a contract to do or not to do something if a collateral event does or does not happen is contingent. Payment upon damage to the godown by fire depends on such an event, matching the statutory illustration of a house being burnt.

  1. AA wagering agreement, because payment depends on an uncertain event
  2. BA contingent contract, because performance depends on a collateral eventCorrect
  3. CA quasi-contract, because no consideration is stated
  4. DA contract of indemnity only, because it concerns loss

Explanation

Section 31 defines a contingent contract as a contract to do or not to do something if some event, collateral to such contract, does or does not happen. Payment on the burning of the promisee's property is the statutory illustration. The wagering option is wrong because the event is collateral and the definition is met.

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