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

Sunita promises to pay Dev Rs. 30,000 if Dev's goods are cleared by customs within 60 days. On day 60 the goods have not been cleared. Which statement is correct?

The contract becomes void. Where a promise depends on a specified uncertain event happening within a fixed time, Section 35 makes the contract void if the time expires without the event. Clearance after day 60 does not revive the contract.

  1. AThe contract remains valid and Sunita must pay once clearance occurs at any later date
  2. BThe contract becomes void because the specified event has not happened by the end of the fixed timeCorrect
  3. CThe contract becomes enforceable against Sunita because the event did not happen
  4. DThe contract is void ab initio because the event was uncertain

Explanation

Under Section 35, a contract contingent on an event happening within a fixed time becomes void if at expiry of that time the event has not happened. Later clearance does not revive it. The enforceability rule applies to contracts contingent on the event not happening, which is not the case here.

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