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

Which statement correctly distinguishes Section 36 from Section 32 of the Indian Contract Act, 1872?

Section 36 treats an agreement contingent on an impossible event as void, whether or not the parties know of the impossibility. Section 32 deals with an uncertain event that is possible when the contract is made; it becomes void only if that event later becomes impossible.

  1. ASection 36 voids an agreement contingent on an impossible event, whereas Section 32 makes a contract contingent on an uncertain event void only if that event later becomes impossibleCorrect
  2. BBoth sections make every contingent contract void from the start
  3. CSection 32 applies only when the impossibility is unknown to the parties
  4. DSection 36 makes the contract enforceable once the parties learn of the impossibility

Explanation

Under Section 36 the agreement is void because the event is impossible when the agreement is made, whether the parties know it or not. Under Section 32 a contract on an uncertain future event is enforceable only after the event happens, and it becomes void if the event becomes impossible. So voidness under Section 32 arises later, not at the start.

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