CMA Foundation · Fundamentals of Business Laws and Business Communication · Contingent Contracts
Sunil agrees to pay Tara Rs. 1,000 if two straight lines should enclose a space. How does the Act treat this agreement?
The agreement is void. Section 36 states that contingent agreements dependent on an impossible event happening are void, whether or not the parties knew of the impossibility when the agreement was made.
- AValid, and enforceable once the lines are drawn
- BVoidable at Tara's option
- CVoid, whether or not the parties knew of the impossibility when making itCorrect
- DValid, but enforceable only after one year
Explanation
Section 36 declares contingent agreements to do or not to do anything if an impossible event happens to be void. This holds whether or not the parties knew of the impossibility at the time. Two straight lines cannot enclose a space, so the event is impossible.
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