Skip to content

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

Rohit promises to pay Sunil ₹20,000 if a certain ship does not return within one year. Three months later the ship is burnt and destroyed. Which statement is correct?

The contract can be enforced now. Where payment depends on an event not happening within a fixed time, the contract may be enforced once it becomes certain the event will not happen. The burning of the ship makes return impossible, so Sunil need not wait for the year to expire.

  1. AThe contract is void because the ship is destroyed
  2. BThe contract can be enforced only after the full year has expired
  3. CThe contract can be enforced, as it has become certain that the ship will not returnCorrect
  4. DThe contract is voidable at Rohit's option

Explanation

Under Section 35, a contingent contract that depends on an event not happening within a fixed time may be enforced when the time has expired and the event has not happened, or earlier if it becomes certain that the event will not happen. Burning of the ship makes its return impossible, so enforcement is allowed now. Waiting for the year to end is not required.

Did you get it right without looking?

One question tells you little. A timed set on Discharge of Contracts shows your real accuracy, how long you take and where you lose marks.

Practise Discharge of ContractsFree diagnostic mock

More Discharge of Contracts questions