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CMA Intermediate · Business Laws and Ethics · Indian Contracts Act, 1872

Mehta agrees to buy Nair's horse if Kapoor, to whom the horse was first offered, refuses to buy it. Kapoor has not yet decided. Which statement is correct?

The contract cannot be enforced until Kapoor refuses to buy the horse. A contingent contract that depends on an uncertain future event happening is unenforceable until that event occurs, though it is not void while the event remains possible.

  1. ANair can enforce the contract immediately, because it was validly made
  2. BThe contract is void from the start because the event is uncertain
  3. CMehta alone can enforce it, since he is the buyer
  4. DThe contract cannot be enforced unless and until Kapoor refuses to buy the horseCorrect

Explanation

Under Section 32, a contract contingent on an uncertain future event happening cannot be enforced until that event happens. Here the event is Kapoor's refusal. The contract is not void at the outset, since the event is still possible, so the void option is wrong.

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