What Is Contingent Contract and Its Characteristics

By April 15, 2022No Comments

The event on which performance depends should not be controlled by the Promisor. If the promisor makes the promise so that the provocateur should do the job after him, he will not be placed under a quota. In N.P.O Ballaya v. K.V.S Setty and Sons, the court ruled that if a client promises his lawyer that if he wins in his case (in which he is the party), he will pay all his taxes and fees. In this case, he does not have the capacity to conduct the legal dispute, so it is a conditional contract. A conditional contract is only considered valid if an event occurs or does not occur and it constitutes security for the contract. Another type of conditional contract is an agreement based on the non-occurrence of a particular event. For example, if company A signs contracts for the sale of goods in transit to company B, if the ship carrying these goods does not return, the goods will only be sold if the ship does not return. When the boat returns, the contract becomes invalid because the non-occurrence of an event did not occur or the event occurred. By better understanding the meaning of a conditional agreement, you can gain insight into the benefits of entering into this type of agreement.

In the betting contract, the occurrence or non-occurrence of an event or act is the premise of the contract, but in a conditional contract, the eventuality or condition is only a guarantee. According to section 31 of the Indian Contract Act of 1872, a conditional contract is a form of contract intended to do or not to do something defined, while the conclusion of the contract takes place when an event, a contract to such a contract created, occurs or not. Example: X agrees to sell his house to Y if M dies. This contract cannot be performed until M is alive. For example, a contract for the payment of a sum of money at the end of a certain three-year period or at the death of a person is not a conditional contract; These events are of a certain nature. However, a contract to pay a sum of money for the destruction of a building by fire is a conditional contract as a condition of uncertain nature. It also highlights an essential element that all insurance, guarantee and indemnity contracts are conditional contracts, as this depends on a future event. In N. Peddanna Ogeti Balayya v. Seinivasayya Setti Sons, (1954), explained that a life insurance contract is also a conditional contract. The basis for a valid contract is not expressly stated in any provision of the Indian Contracts Act.

If, for example, two parties intend to establish a legal relationship through the completion of legal formalities, then there is a sense of purpose and the possibility of accomplishing it. However, it is tacitly applied before the conclusion of a valid contract. A characteristic of the conditional contract is the dependence of its performance on the occurrence or non-occurrence of an uncertain event that serves as collateral for the contract. Read 3 min Other types of insurance policies use conditional contracts. Homeowners` insurance policies agree to pay under certain conditions that cause damage to the property, but if no situation occurs that causes the applicable damage, the funds will not be spent. For example, A signs a contract with B that he pays him $100 when he delivers the books to his home. Here, the $100 is the consideration that is part of the contract, so it is not a conditional contract, because A`s obligation depends on the event that is part of the event and not on the guarantee of the contract. A conditional contract can be used to create huge benefits for both parties.

One advantage would be that it would limit the loss that would occur if the contract failed. Another would be that it would not lead to one party earning more at the expense of the other. This leads to an increase in trust between the two sides, which would allow them to conduct more advantageous negotiations in the future. [2] A contract can be unconditional or absolute on the one hand and conditional or conditional on the other. The absolute or unconditional contract is without reservations or conditions and must be executed in any case. On the other hand, a conditional or conditional contract is a contract where a promise is conditional and the contract is fulfilled only if a future uncertain event occurs or not. The event must be a guarantee for the contract. The condition can be suspensive or retrospective. For example, the goods are shipped after approval, the contract is a conditional contract, depending on the buyer`s act of accepting or rejecting the goods. A conditional contract can also be considered as a protection against a future change of plans It was found that the contract was a conditional contract and because the urgency failed, there was no contract that could be made the idea of an execution decree. A conditional contract can also be seen as protection against a future change of plan.

[2] Conditional contracts can also lead to an effective agreement if each party has different temporal preferences. For example, one party may want immediate payments, while the other party may be interested in longer-term payments. [1] In addition, emergency contracts can foster an agreement in negotiations that involves definite differences in expectations for the future. [2] Simply put, this is a type of contract in which the promising person fulfills his or her obligation only if certain conditions set out in the contract are met. A contract is not conditional if the occurrence or non-occurrence of the contingency depends on the will of a party. In Secy of State for India v. A.J. Arathon (1869), it was the supply of timber to a ministry. The wood must be approved by the superintendent of the plant.

Therefore, he disagreed. The supplier brought an action against the government for breach of contract. The Madras Supreme Court concluded that the contract was a conditional contract, and the fact that the permit was a guarantee and that its execution could only be required after approval. Since the possibility of the contract was not performed, there was no breach of contract. Example: X promises to pay 10,000 rupees to Y when the sun rises in the west the next morning. This contract is void because it is not practical for the event. There are certain essential elements of a conditional contract, as specified in section 31 of the Contracts Act. A contract to compensate B up to Rs 20,000, in exchange for B paying Rs 1,000 annual premium if B`s factory is burned.

This is a conditional contract. To understand the true meaning of the quota contract, we will divide the quota contract into two words, “quota” and “contract”. The quota is the opposite meaning of absolute and here is absolute, of which we are completely sure or there are no conditions to conclude the contract and the contract is the one that fulfills the foundations of a valid contract. .