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

Rohan Textiles agrees to pay Meera Exports Rs 8 lakh if a particular cargo vessel does not return to Kochi port within one year. Six months later the vessel is burnt and lost at sea. Which statement about enforceability is correct?

The contract can be enforced now. For a contract contingent on an event not happening within a fixed time, enforcement is allowed once the time expires or earlier if it becomes certain the event will not happen. The vessel's loss makes non-return certain, so the payment obligation arises.

  1. AThe contract is void because the event has become impossible
  2. BThe contract can be enforced only after the full year expires
  3. CThe contract can be enforced now, since it has become certain the vessel will not return within the time fixedCorrect
  4. DThe contract can never be enforced because it depends on an uncertain event

Explanation

Under Section 35, a contract contingent on an event not happening within a fixed time may be enforced when the time has expired without the event, or earlier if it becomes certain the event will not happen. The vessel's loss makes this certain. Waiting for the year to end is wrong because the Act allows enforcement earlier. Voidness applies to the opposite case, where the event was required to happen.

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