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

Ravi Traders agrees to pay Mehta Associates ₹50,000 if two straight lines enclose a space. Neither party realised at the time that this was geometrically impossible. What is the position of the agreement?

The agreement is void. Under Section 36, a contingent agreement dependent on an impossible event is void whether or not the parties knew of the impossibility at the time. Two straight lines cannot enclose a space, so ignorance does not help.

  1. AVoid, because the event is impossible even though the parties were unaware of itCorrect
  2. BValid, because the parties acted in good faith without knowledge of the impossibility
  3. CVoidable at the option of Mehta Associates
  4. DValid, but enforceable only after one year

Explanation

Section 36 makes agreements contingent on impossible events void whether or not the impossibility is known to the parties when the agreement is made. The parties' good faith therefore does not save it. This follows the illustration of two straight lines enclosing a space.

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