CMA Foundation · Fundamentals of Business Laws and Business Communication · Contingent Contracts
Under the Indian Contract Act, 1872, what is the legal status of a contingent agreement to do or not to do something if an impossible event happens?
Such an agreement is void. Section 36 states that contingent agreements to do or not to do anything if an impossible event happens are void, whether or not the parties knew of the impossibility when making the agreement.
- AValid, but enforceable only after the event happens
- BVoidable at the option of the promisee
- CVoidCorrect
- DValid, if both parties knew the event was impossible
Explanation
Section 36 declares contingent agreements that depend on an impossible event to be void. It is not merely voidable and does not need the event to occur. The parties' knowledge of the impossibility is irrelevant, so the option about both parties knowing is wrong.
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