CMA Foundation · Fundamentals of Business Laws and Business Communication · Contingent Contracts
Sharma Ltd. promises to pay Rs. 80,000 to Iyer & Co. if a certain consignment does not arrive at Chennai within one year. Within five months, the consignment is lost when the carrying vessel is burnt. Which statement is correct?
The contract can be enforced as soon as it becomes certain that the consignment will not arrive. Section 35 permits enforcement of a contract contingent on an event not happening within a fixed time when that non-happening becomes certain before the time expires.
- AThe contract is void because the event became impossible
- BThe contract can be enforced only after the one year expires
- CThe contract can be enforced as soon as it becomes certain the consignment will not arriveCorrect
- DThe contract is voidable at the option of Sharma Ltd.
Explanation
Section 35 allows a contract contingent on an event not happening within a fixed time to be enforced when the time has expired without the event, or, before the time expires, if it becomes certain the event will not happen. The vessel's loss makes arrival certain not to happen, so enforcement is possible now. Waiting a year is unnecessary.
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