ICAI Notes- Unit 6: Contingent and Quasi Contracts | Business Laws for CA Foundation PDF Download

 Page 1


2.137
THE INDIAN CONTRACT ACT, 1872 
LEARNING OUTCOMES 
UNIT – 6: CONTINGENT AND QUASI CONTRACTS 
 
After studying this Chapter, you will be able to understand: 
? Basic characteristics of ‘Contingent contract’ and ‘Quasi-contract’ 
so that you are able to distinguish between a contract of any of 
these types and a simple contract. 
? Rules relating to enforcement of these in order to gain an 
understanding of rights and obligations of the parties to the 
contract. 
 
6.1 CONTINGENT CONTRACTS 
In this unit, we shall briefly examine what is called a ‘contingent contract’, its essentials and 
the rules regarding enforcement of this type of contracts. The Contract Act recognises 
certain cases in which an obligation is created without a contract. Such obligations arise out 
of certain relations which cannot be called as contracts in the strict sense. There is no offer, 
no acceptance, no consensus ad idem and in fact neither agreement nor promise and yet the 
Contingent Contracts
Rules Relating to Enforcement 
of Contingent Contracts
Difference between Contingent 
& Wagering Contract
Quasi-Contracts
Cases deemed as 
Quasi-Contracts
UNIT OVERVIEW 
© The Institute of Chartered Accountants of India
Page 2


2.137
THE INDIAN CONTRACT ACT, 1872 
LEARNING OUTCOMES 
UNIT – 6: CONTINGENT AND QUASI CONTRACTS 
 
After studying this Chapter, you will be able to understand: 
? Basic characteristics of ‘Contingent contract’ and ‘Quasi-contract’ 
so that you are able to distinguish between a contract of any of 
these types and a simple contract. 
? Rules relating to enforcement of these in order to gain an 
understanding of rights and obligations of the parties to the 
contract. 
 
6.1 CONTINGENT CONTRACTS 
In this unit, we shall briefly examine what is called a ‘contingent contract’, its essentials and 
the rules regarding enforcement of this type of contracts. The Contract Act recognises 
certain cases in which an obligation is created without a contract. Such obligations arise out 
of certain relations which cannot be called as contracts in the strict sense. There is no offer, 
no acceptance, no consensus ad idem and in fact neither agreement nor promise and yet the 
Contingent Contracts
Rules Relating to Enforcement 
of Contingent Contracts
Difference between Contingent 
& Wagering Contract
Quasi-Contracts
Cases deemed as 
Quasi-Contracts
UNIT OVERVIEW 
© The Institute of Chartered Accountants of India
  BUSINESS LAWS 
2.138 
law imposes an obligation on one party and confers a right in favour of the other. We shall 
have a look on these cases of ‘Quasi-contracts’. 
A contract may be absolute or a contingent. An Absolute contract is one where the promisor 
undertakes to perform the contract in any event without any condition. 
Definition of ‘Contingent Contract’ (Section 31) 
“A contract to do or not to do something, if some event, collateral to such contract, 
does or does not happen”. 
Contracts of Insurance, indemnity and guarantee fall under this category. 
Example 1: A contracts to pay B 
`
 10,00,000 if B’s house is burnt. This is a contingent 
contract. 
Example 2: A makes a contract with B to buy his house for 
`
 50,00,000 if he is able to secure 
to bank loan for that amount. The contract is contingent contract.
Meaning of collateral Event: Pollock and Mulla defined collateral event as “an event 
which is neither a performance directly promised as part of the contract, nor the whole of 
the consideration for a promise”. 
Example 3: A contracts to pay B 
`
 10,00,000 if B’s house is burnt. This is a contingent 
contract. Here the burning of the B’s house is neither a performance promised as part of the 
contract nor it is the consideration obtained from B. The liability of A arises only on the 
happening of the collateral event. 
Example 4: A agrees to transfer his property to B if her wife C dies. This is a contingent 
contract because the property can be transferred only when C dies.
Essentials of a contingent contract 
(a) The performance of a contingent contract would depend upon the happening or 
non-happening of some event or condition.  The condition may be precedent or 
subsequent.  
Example 5: ‘A’ promises to pay 
`
 50,000 to ‘B’ if it rains on first of the next month. 
(b) The event referred to as collateral to the contract. The event is not part of the 
contract.  The event should be neither performance promised nor a consideration for 
a promise. 
 Thus (i) where A agrees to deliver 100 bags of wheat and B agrees to pay the price 
only afterwards, the contract is a conditional contract and not contingent; because 
the event on which B’s obligation is made to depend is part of the promise itself and 
not a collateral event. (ii) Similarly, where A promises to pay B 
` 
1,00,000 if he marries 
© The Institute of Chartered Accountants of India
Page 3


2.137
THE INDIAN CONTRACT ACT, 1872 
LEARNING OUTCOMES 
UNIT – 6: CONTINGENT AND QUASI CONTRACTS 
 
After studying this Chapter, you will be able to understand: 
? Basic characteristics of ‘Contingent contract’ and ‘Quasi-contract’ 
so that you are able to distinguish between a contract of any of 
these types and a simple contract. 
? Rules relating to enforcement of these in order to gain an 
understanding of rights and obligations of the parties to the 
contract. 
 
6.1 CONTINGENT CONTRACTS 
In this unit, we shall briefly examine what is called a ‘contingent contract’, its essentials and 
the rules regarding enforcement of this type of contracts. The Contract Act recognises 
certain cases in which an obligation is created without a contract. Such obligations arise out 
of certain relations which cannot be called as contracts in the strict sense. There is no offer, 
no acceptance, no consensus ad idem and in fact neither agreement nor promise and yet the 
Contingent Contracts
Rules Relating to Enforcement 
of Contingent Contracts
Difference between Contingent 
& Wagering Contract
Quasi-Contracts
Cases deemed as 
Quasi-Contracts
UNIT OVERVIEW 
© The Institute of Chartered Accountants of India
  BUSINESS LAWS 
2.138 
law imposes an obligation on one party and confers a right in favour of the other. We shall 
have a look on these cases of ‘Quasi-contracts’. 
A contract may be absolute or a contingent. An Absolute contract is one where the promisor 
undertakes to perform the contract in any event without any condition. 
Definition of ‘Contingent Contract’ (Section 31) 
“A contract to do or not to do something, if some event, collateral to such contract, 
does or does not happen”. 
Contracts of Insurance, indemnity and guarantee fall under this category. 
Example 1: A contracts to pay B 
`
 10,00,000 if B’s house is burnt. This is a contingent 
contract. 
Example 2: A makes a contract with B to buy his house for 
`
 50,00,000 if he is able to secure 
to bank loan for that amount. The contract is contingent contract.
Meaning of collateral Event: Pollock and Mulla defined collateral event as “an event 
which is neither a performance directly promised as part of the contract, nor the whole of 
the consideration for a promise”. 
Example 3: A contracts to pay B 
`
 10,00,000 if B’s house is burnt. This is a contingent 
contract. Here the burning of the B’s house is neither a performance promised as part of the 
contract nor it is the consideration obtained from B. The liability of A arises only on the 
happening of the collateral event. 
Example 4: A agrees to transfer his property to B if her wife C dies. This is a contingent 
contract because the property can be transferred only when C dies.
Essentials of a contingent contract 
(a) The performance of a contingent contract would depend upon the happening or 
non-happening of some event or condition.  The condition may be precedent or 
subsequent.  
Example 5: ‘A’ promises to pay 
`
 50,000 to ‘B’ if it rains on first of the next month. 
(b) The event referred to as collateral to the contract. The event is not part of the 
contract.  The event should be neither performance promised nor a consideration for 
a promise. 
 Thus (i) where A agrees to deliver 100 bags of wheat and B agrees to pay the price 
only afterwards, the contract is a conditional contract and not contingent; because 
the event on which B’s obligation is made to depend is part of the promise itself and 
not a collateral event. (ii) Similarly, where A promises to pay B 
` 
1,00,000 if he marries 
© The Institute of Chartered Accountants of India
2.139
THE INDIAN CONTRACT ACT, 1872 
C, it is not a contingent contract. (iii) ‘A’ agreed to construct a swimming pool for ‘B’ 
for 
` 
20,00,000. And ‘B’ agreed to make the payment only on the completion of the 
swimming pool. It is not a contingent contract as the event (i.e. construction of the 
swimming pool) is directly connected with the contract. 
(c) The contingent event should not be a mere ‘will’ of the promisor.  The event 
should be contingent in addition to being the will of the promisor. 
Example 6: If A promises to pay B 
` 
100,000, if he so chooses, it is not a contingent 
contract. (In fact, it is not a contract at all). However, where the event is within the 
promisor’s will but not merely his will, it may be contingent contract. 
Example 7: If A promises to pay B 
`
100,000 if it rains on 1
st
 April and A leave Delhi 
for Mumbai on a particular day, it is a contingent contract, because going to Mumbai 
is an event no doubt within A’s will, but raining is not merely his will.
(d) The event must be uncertain. Where the event is certain or bound to happen, the 
contract is due to be performed, then it is a not contingent contract. 
Example 8: ‘A’ agreed to sell his agricultural land to ‘B’ after obtaining the necessary 
permission from the collector. As a matter of course, the permission was generally 
granted on the fulfilment of certain formalities. It was held that the contract was not 
a contingent contract as the grant of permission by the collector was almost a 
certainty. 
6.2 RULES RELATING TO ENFORCEMENT 
The rules relating to enforcement of a contingent contract are laid down in sections 32, 33, 
34, 35 and 36 of the Act.  
(a) Enforcement of contracts contingent on an event happening:  
 Section 32 says that “where a contingent contract is made to do or not to do 
anything if an uncertain future event happens, it cannot be enforced by law unless 
and until that event has happened. If the event becomes impossible, such contracts 
become void”. 
Example 9: A contracts to pay B a sum of money when B marries C. C dies without 
being married to B. The Contract becomes void. 
(b) Enforcement of contracts contingent on an event not happening: Section 33 says 
that “Where a contingent contract is made to do or not do anything if an uncertain 
future event does not happen, it can be enforced only when the happening of that 
event becomes impossible and not before”. 
© The Institute of Chartered Accountants of India
Page 4


2.137
THE INDIAN CONTRACT ACT, 1872 
LEARNING OUTCOMES 
UNIT – 6: CONTINGENT AND QUASI CONTRACTS 
 
After studying this Chapter, you will be able to understand: 
? Basic characteristics of ‘Contingent contract’ and ‘Quasi-contract’ 
so that you are able to distinguish between a contract of any of 
these types and a simple contract. 
? Rules relating to enforcement of these in order to gain an 
understanding of rights and obligations of the parties to the 
contract. 
 
6.1 CONTINGENT CONTRACTS 
In this unit, we shall briefly examine what is called a ‘contingent contract’, its essentials and 
the rules regarding enforcement of this type of contracts. The Contract Act recognises 
certain cases in which an obligation is created without a contract. Such obligations arise out 
of certain relations which cannot be called as contracts in the strict sense. There is no offer, 
no acceptance, no consensus ad idem and in fact neither agreement nor promise and yet the 
Contingent Contracts
Rules Relating to Enforcement 
of Contingent Contracts
Difference between Contingent 
& Wagering Contract
Quasi-Contracts
Cases deemed as 
Quasi-Contracts
UNIT OVERVIEW 
© The Institute of Chartered Accountants of India
  BUSINESS LAWS 
2.138 
law imposes an obligation on one party and confers a right in favour of the other. We shall 
have a look on these cases of ‘Quasi-contracts’. 
A contract may be absolute or a contingent. An Absolute contract is one where the promisor 
undertakes to perform the contract in any event without any condition. 
Definition of ‘Contingent Contract’ (Section 31) 
“A contract to do or not to do something, if some event, collateral to such contract, 
does or does not happen”. 
Contracts of Insurance, indemnity and guarantee fall under this category. 
Example 1: A contracts to pay B 
`
 10,00,000 if B’s house is burnt. This is a contingent 
contract. 
Example 2: A makes a contract with B to buy his house for 
`
 50,00,000 if he is able to secure 
to bank loan for that amount. The contract is contingent contract.
Meaning of collateral Event: Pollock and Mulla defined collateral event as “an event 
which is neither a performance directly promised as part of the contract, nor the whole of 
the consideration for a promise”. 
Example 3: A contracts to pay B 
`
 10,00,000 if B’s house is burnt. This is a contingent 
contract. Here the burning of the B’s house is neither a performance promised as part of the 
contract nor it is the consideration obtained from B. The liability of A arises only on the 
happening of the collateral event. 
Example 4: A agrees to transfer his property to B if her wife C dies. This is a contingent 
contract because the property can be transferred only when C dies.
Essentials of a contingent contract 
(a) The performance of a contingent contract would depend upon the happening or 
non-happening of some event or condition.  The condition may be precedent or 
subsequent.  
Example 5: ‘A’ promises to pay 
`
 50,000 to ‘B’ if it rains on first of the next month. 
(b) The event referred to as collateral to the contract. The event is not part of the 
contract.  The event should be neither performance promised nor a consideration for 
a promise. 
 Thus (i) where A agrees to deliver 100 bags of wheat and B agrees to pay the price 
only afterwards, the contract is a conditional contract and not contingent; because 
the event on which B’s obligation is made to depend is part of the promise itself and 
not a collateral event. (ii) Similarly, where A promises to pay B 
` 
1,00,000 if he marries 
© The Institute of Chartered Accountants of India
2.139
THE INDIAN CONTRACT ACT, 1872 
C, it is not a contingent contract. (iii) ‘A’ agreed to construct a swimming pool for ‘B’ 
for 
` 
20,00,000. And ‘B’ agreed to make the payment only on the completion of the 
swimming pool. It is not a contingent contract as the event (i.e. construction of the 
swimming pool) is directly connected with the contract. 
(c) The contingent event should not be a mere ‘will’ of the promisor.  The event 
should be contingent in addition to being the will of the promisor. 
Example 6: If A promises to pay B 
` 
100,000, if he so chooses, it is not a contingent 
contract. (In fact, it is not a contract at all). However, where the event is within the 
promisor’s will but not merely his will, it may be contingent contract. 
Example 7: If A promises to pay B 
`
100,000 if it rains on 1
st
 April and A leave Delhi 
for Mumbai on a particular day, it is a contingent contract, because going to Mumbai 
is an event no doubt within A’s will, but raining is not merely his will.
(d) The event must be uncertain. Where the event is certain or bound to happen, the 
contract is due to be performed, then it is a not contingent contract. 
Example 8: ‘A’ agreed to sell his agricultural land to ‘B’ after obtaining the necessary 
permission from the collector. As a matter of course, the permission was generally 
granted on the fulfilment of certain formalities. It was held that the contract was not 
a contingent contract as the grant of permission by the collector was almost a 
certainty. 
6.2 RULES RELATING TO ENFORCEMENT 
The rules relating to enforcement of a contingent contract are laid down in sections 32, 33, 
34, 35 and 36 of the Act.  
(a) Enforcement of contracts contingent on an event happening:  
 Section 32 says that “where a contingent contract is made to do or not to do 
anything if an uncertain future event happens, it cannot be enforced by law unless 
and until that event has happened. If the event becomes impossible, such contracts 
become void”. 
Example 9: A contracts to pay B a sum of money when B marries C. C dies without 
being married to B. The Contract becomes void. 
(b) Enforcement of contracts contingent on an event not happening: Section 33 says 
that “Where a contingent contract is made to do or not do anything if an uncertain 
future event does not happen, it can be enforced only when the happening of that 
event becomes impossible and not before”. 
© The Institute of Chartered Accountants of India
  BUSINESS LAWS 
2.140 
Example 10: Where ‘P’ agrees to pay ‘Q’ a sum of money if a particular ship does not 
return, the contract becomes enforceable only if the ship sinks so that it cannot 
return.
 Where A agrees to pay sum of money to B if certain ship does not return however 
the ship returns back. Here the contract becomes void. 
(c) A contract would cease to be enforceable if it is contingent upon the conduct of 
a living person when that living person does something to make the ‘event’ or 
‘conduct’ as impossible of happening.   
 Section 34 says that “if a contract is contingent upon as to how a person will act at 
an unspecified time, the event shall be considered to have become impossible when 
such person does anything which renders it impossible that he should so act within 
any definite time or otherwise than under further contingencies”. 
Example 11: Where ‘A’ agrees to pay ‘B’ a sum of money if ‘B’ marries ‘C’.  ‘C’ marries 
‘D’. This act of ‘C’ has rendered the event of ‘B’ marrying ‘C’ as impossible; it is 
though possible if there is divorce between ‘C’ and ‘D’.
 In Frost V. Knight, the defendant promised to marry the plaintiff on the death of his 
father. While the father was still alive, he married another woman. It was held that it 
had become impossible that he should marry the plaintiff and she was entitled to sue 
him for the breach of the contract. 
(d) Contingent on happening of specified event within the fixed time: Section 35 
says that Contingent contracts to do or not to do anything, if a specified uncertain 
event happens within a fixed time, becomes void if, at the expiration of time fixed, 
such event has not happened, or if, before the time fixed, such event becomes 
impossible. 
Example 12: A promises to pay B a sum of money if certain ship returns within a 
year. The contract may be enforced if the ship returns within the year, and becomes 
void if the ship is burnt within the year.
(e)  Contingent on specified event not happening within fixed time: Section 35 also 
says that - “Contingent contracts to do or not to do anything, if a specified uncertain 
event does not happen within a fixed time, may be enforced by law when the time 
fixed has expired, and such event has not happened or before the time fixed has 
expired, if it becomes certain that such event will not happen”. 
Example 13: A promises to pay B a sum of money if a certain ship does not return 
within a year. The contract may be enforced if the ship does not return within the 
year, or is burnt within the year. 
© The Institute of Chartered Accountants of India
Page 5


2.137
THE INDIAN CONTRACT ACT, 1872 
LEARNING OUTCOMES 
UNIT – 6: CONTINGENT AND QUASI CONTRACTS 
 
After studying this Chapter, you will be able to understand: 
? Basic characteristics of ‘Contingent contract’ and ‘Quasi-contract’ 
so that you are able to distinguish between a contract of any of 
these types and a simple contract. 
? Rules relating to enforcement of these in order to gain an 
understanding of rights and obligations of the parties to the 
contract. 
 
6.1 CONTINGENT CONTRACTS 
In this unit, we shall briefly examine what is called a ‘contingent contract’, its essentials and 
the rules regarding enforcement of this type of contracts. The Contract Act recognises 
certain cases in which an obligation is created without a contract. Such obligations arise out 
of certain relations which cannot be called as contracts in the strict sense. There is no offer, 
no acceptance, no consensus ad idem and in fact neither agreement nor promise and yet the 
Contingent Contracts
Rules Relating to Enforcement 
of Contingent Contracts
Difference between Contingent 
& Wagering Contract
Quasi-Contracts
Cases deemed as 
Quasi-Contracts
UNIT OVERVIEW 
© The Institute of Chartered Accountants of India
  BUSINESS LAWS 
2.138 
law imposes an obligation on one party and confers a right in favour of the other. We shall 
have a look on these cases of ‘Quasi-contracts’. 
A contract may be absolute or a contingent. An Absolute contract is one where the promisor 
undertakes to perform the contract in any event without any condition. 
Definition of ‘Contingent Contract’ (Section 31) 
“A contract to do or not to do something, if some event, collateral to such contract, 
does or does not happen”. 
Contracts of Insurance, indemnity and guarantee fall under this category. 
Example 1: A contracts to pay B 
`
 10,00,000 if B’s house is burnt. This is a contingent 
contract. 
Example 2: A makes a contract with B to buy his house for 
`
 50,00,000 if he is able to secure 
to bank loan for that amount. The contract is contingent contract.
Meaning of collateral Event: Pollock and Mulla defined collateral event as “an event 
which is neither a performance directly promised as part of the contract, nor the whole of 
the consideration for a promise”. 
Example 3: A contracts to pay B 
`
 10,00,000 if B’s house is burnt. This is a contingent 
contract. Here the burning of the B’s house is neither a performance promised as part of the 
contract nor it is the consideration obtained from B. The liability of A arises only on the 
happening of the collateral event. 
Example 4: A agrees to transfer his property to B if her wife C dies. This is a contingent 
contract because the property can be transferred only when C dies.
Essentials of a contingent contract 
(a) The performance of a contingent contract would depend upon the happening or 
non-happening of some event or condition.  The condition may be precedent or 
subsequent.  
Example 5: ‘A’ promises to pay 
`
 50,000 to ‘B’ if it rains on first of the next month. 
(b) The event referred to as collateral to the contract. The event is not part of the 
contract.  The event should be neither performance promised nor a consideration for 
a promise. 
 Thus (i) where A agrees to deliver 100 bags of wheat and B agrees to pay the price 
only afterwards, the contract is a conditional contract and not contingent; because 
the event on which B’s obligation is made to depend is part of the promise itself and 
not a collateral event. (ii) Similarly, where A promises to pay B 
` 
1,00,000 if he marries 
© The Institute of Chartered Accountants of India
2.139
THE INDIAN CONTRACT ACT, 1872 
C, it is not a contingent contract. (iii) ‘A’ agreed to construct a swimming pool for ‘B’ 
for 
` 
20,00,000. And ‘B’ agreed to make the payment only on the completion of the 
swimming pool. It is not a contingent contract as the event (i.e. construction of the 
swimming pool) is directly connected with the contract. 
(c) The contingent event should not be a mere ‘will’ of the promisor.  The event 
should be contingent in addition to being the will of the promisor. 
Example 6: If A promises to pay B 
` 
100,000, if he so chooses, it is not a contingent 
contract. (In fact, it is not a contract at all). However, where the event is within the 
promisor’s will but not merely his will, it may be contingent contract. 
Example 7: If A promises to pay B 
`
100,000 if it rains on 1
st
 April and A leave Delhi 
for Mumbai on a particular day, it is a contingent contract, because going to Mumbai 
is an event no doubt within A’s will, but raining is not merely his will.
(d) The event must be uncertain. Where the event is certain or bound to happen, the 
contract is due to be performed, then it is a not contingent contract. 
Example 8: ‘A’ agreed to sell his agricultural land to ‘B’ after obtaining the necessary 
permission from the collector. As a matter of course, the permission was generally 
granted on the fulfilment of certain formalities. It was held that the contract was not 
a contingent contract as the grant of permission by the collector was almost a 
certainty. 
6.2 RULES RELATING TO ENFORCEMENT 
The rules relating to enforcement of a contingent contract are laid down in sections 32, 33, 
34, 35 and 36 of the Act.  
(a) Enforcement of contracts contingent on an event happening:  
 Section 32 says that “where a contingent contract is made to do or not to do 
anything if an uncertain future event happens, it cannot be enforced by law unless 
and until that event has happened. If the event becomes impossible, such contracts 
become void”. 
Example 9: A contracts to pay B a sum of money when B marries C. C dies without 
being married to B. The Contract becomes void. 
(b) Enforcement of contracts contingent on an event not happening: Section 33 says 
that “Where a contingent contract is made to do or not do anything if an uncertain 
future event does not happen, it can be enforced only when the happening of that 
event becomes impossible and not before”. 
© The Institute of Chartered Accountants of India
  BUSINESS LAWS 
2.140 
Example 10: Where ‘P’ agrees to pay ‘Q’ a sum of money if a particular ship does not 
return, the contract becomes enforceable only if the ship sinks so that it cannot 
return.
 Where A agrees to pay sum of money to B if certain ship does not return however 
the ship returns back. Here the contract becomes void. 
(c) A contract would cease to be enforceable if it is contingent upon the conduct of 
a living person when that living person does something to make the ‘event’ or 
‘conduct’ as impossible of happening.   
 Section 34 says that “if a contract is contingent upon as to how a person will act at 
an unspecified time, the event shall be considered to have become impossible when 
such person does anything which renders it impossible that he should so act within 
any definite time or otherwise than under further contingencies”. 
Example 11: Where ‘A’ agrees to pay ‘B’ a sum of money if ‘B’ marries ‘C’.  ‘C’ marries 
‘D’. This act of ‘C’ has rendered the event of ‘B’ marrying ‘C’ as impossible; it is 
though possible if there is divorce between ‘C’ and ‘D’.
 In Frost V. Knight, the defendant promised to marry the plaintiff on the death of his 
father. While the father was still alive, he married another woman. It was held that it 
had become impossible that he should marry the plaintiff and she was entitled to sue 
him for the breach of the contract. 
(d) Contingent on happening of specified event within the fixed time: Section 35 
says that Contingent contracts to do or not to do anything, if a specified uncertain 
event happens within a fixed time, becomes void if, at the expiration of time fixed, 
such event has not happened, or if, before the time fixed, such event becomes 
impossible. 
Example 12: A promises to pay B a sum of money if certain ship returns within a 
year. The contract may be enforced if the ship returns within the year, and becomes 
void if the ship is burnt within the year.
(e)  Contingent on specified event not happening within fixed time: Section 35 also 
says that - “Contingent contracts to do or not to do anything, if a specified uncertain 
event does not happen within a fixed time, may be enforced by law when the time 
fixed has expired, and such event has not happened or before the time fixed has 
expired, if it becomes certain that such event will not happen”. 
Example 13: A promises to pay B a sum of money if a certain ship does not return 
within a year. The contract may be enforced if the ship does not return within the 
year, or is burnt within the year. 
© The Institute of Chartered Accountants of India
2.141 
THE INDIAN CONTRACT ACT, 1872 
(f)  Contingent on an impossible event (Section 36): Contingent agreements to do or 
not to do anything, if an impossible event happens are void, whether the 
impossibility of the event is known or not to the parties to the agreement at the time 
when it is made. 
Example 14: ‘A’ agrees to pay ‘B’ 
`
one lakh if sun rises in the west next morning.  
This is an impossible event and hence void.
Example 15: X agrees to pay Y 
`
1,00,000 if two straight lines should enclose a space. 
The agreement is void. 
Difference between a contingent contract and a wagering contract 
Basis of difference Contingent contract Wagering contract 
Meaning  A contingent contract is a 
contract to do or not to 
do something with 
reference to a collateral 
event happening or not 
happening. 
A wagering agreement is 
a promise to give money 
or money’s worth with 
reference to an uncertain 
event happening or not 
happening.   
Reciprocal promises Contingent contract may 
not contain reciprocal 
promises. 
A wagering agreement 
consists of reciprocal 
promises. 
Uncertain event In a contingent contract, 
the event is collateral. 
In a wagering contract, 
the uncertain event is the 
core factor. 
Nature of contract Contingent contract may 
not be wagering in 
nature. 
A wagering agreement is 
essentially contingent in 
nature. 
Interest of contracting 
parties 
Contracting parties have 
interest in the subject 
matter in contingent 
contract.
The contracting parties 
have no interest in the 
subject matter. 
Doctrine of mutuality of 
lose and gain 
Contingent contract is not 
based on doctrine of 
mutuality of lose and 
gain. 
A wagering contract is a 
game, losing and gaining 
alone matters. 
Effect of contract Contingent contract is 
valid. 
A wagering agreement is 
void. 
© The Institute of Chartered Accountants of India