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CS Professional · Drafting, Pleadings and Appearances · Drafting of Commercial Contracts

Mehta Traders agrees to sell 500 bags of rice to Kapoor Foods at Rs 2,000 per bag if the Government of India lifts the export ban on rice. The ban is still in force and no decision has been announced. Kapoor Foods sues for delivery. Under Section 32 of the Indian Contract Act, 1872, what is the position?

The contract cannot be enforced unless and until the export ban is lifted. Under Section 32, a contract contingent on an event happening is unenforceable until that event occurs. It becomes void only if the event becomes impossible, which has not happened here.

  1. AThe contract is enforceable immediately because the parties have consented and fixed the price
  2. BThe contract cannot be enforced unless and until the ban is liftedCorrect
  3. CThe contract is void from the date of signing because the event is uncertain
  4. DThe contract can be enforced only after one year from signing

Explanation

A contract contingent on an uncertain future event happening cannot be enforced by law unless and until that event has happened. Here the lifting of the ban has not occurred, so the suit is premature. The contract is not void because the event has not become impossible; it merely remains unenforceable for now.

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