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

Orion Exports promises to deliver 500 cartons to Pune Traders if the Reserve Bank grants a specified licence to Pune Traders within six months. The six months expire and no licence is granted. Which statement is correct?

The contract becomes void. Where a contract is contingent on a specified event happening within a fixed time, it becomes void if the time expires without the event happening. Since no licence was granted within six months, the delivery obligation cannot be enforced.

  1. AThe contract becomes void as the event did not happen within the fixed timeCorrect
  2. BThe contract continues until the licence is eventually granted
  3. COrion may enforce the contract against Pune Traders
  4. DPune Traders must pay damages to Orion

Explanation

A contingent contract to do something if a specified uncertain event happens within a fixed time becomes void if, when the time expires, the event has not happened. The licence was not granted within six months, so the contract is void. Neither party can enforce it.

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