contingent contract

DIFFERENCE BETWEEN A WAGER AND A CONTINGENT CONTRACT

1. Contingent Contract Definition.

WAGER CONTRACT 1. CONTINGENT CONTRACT
2. Contingent Contract is a contract in which a promise is conditional and the
contract shall be perform only on the happening or not happening of some future
uncertain event. Section 31 of the Contract Act defines a contingent contract as 1.THERE ARE MUTUAL PROMISES. 1. IT IS NOT NECESARRY THAT THERE
contract to do or not to do something, if some event, collateral to such contract SHOULD BE MUTUAL PROMISE.
E.g.:
burnt. This is a contingent contract.
3. Essential Characteristics
4. There should be existence of a contingency; 2. 2THE PARTIES MUST 3. 2)THE FUTURE EVENT IS MERELY
5. happening or non-happening of some event in future. CONTEMPLATE COLLATERAL OR INCIDENTAL TO
6. The contract is contingent on the happening or the non-happening of a certain DETERMINATION OF THE CONTRACT.
event. The said events can be precedent or subsequent to the contract. UNCERTAIN EVENT AS SOLE
7. Contingency must be uncertain. CONDITION OF THEIR
8. If the event is sure to happen, then the contract is due to be performed. This is not CONTRACT.
a contingent contract. The event should be uncertain.
9. The event must be collateral 3) NEITHER PARTIES INTENDS TO .3) THE PARTIES INTEND TO PERFORM
10. It is important that the event is not a part of the contract. It cannot be the PERFORM THE CONTRACT ITSELF THEIR RESPECTIVE OBLIGATIONS.
performance promised or a consideration for a promise.
11. incidental to the contract.
12. The event cannot be a wish of the promisor. 4) THESE CONTRACTS ARE VOID 4) THESE ARE GOOD UNLESS THEY ARE
13. Rules regarding or Enforcement of Contingent Contracts UNDER SECTION 30 OF THE INDIAN DECLARED BY LAW TO BE BAD.
14. 1.Contingent contracts dependent on the happening of an uncertain future event CONTRACT ACT.
cannot be enforced until the event has happen. If the event becomes impossible
such contract becomes void (Sec. 32). 5) THE PARTIES HAVE NO OTHER 5) THE PARTIES HAVE INTERST IN THE
15. 2. Contingent contract to do or not to do anything, if an uncertain future event INTERSET IN THE OCCURRENCE OR OCCURRENCE OR NON OCCURRENCE.
does not happen, can be enforced when the happening of that event becomes NON-OCCURRENCE OF THE EVENT.
impossible, and not before. (Sec.33).
16. 3. If any contract is contingent upon how a person will act at an unspecified time,
the event shall be considered to be impossible when such person does anything 6) THERE IS A SENSE OF 1. 6) THERE IS NO SENSE OF WAGERING.
which renders it impossible that he should so act within any definite time, or CONTINGENCY.
otherwise than under future contingencies (Sec.34).
17. 4. Contingent contract to do or not to do anything, if a specified uncertain event
happens within a it
happening becomes impossible before the expiry of that time. Contingent contract
to do or not to do anything, if a specified uncertain event happens within a fixed AGENCY
it happening becomes 2. Definition of Agency al relation between two parties
impossible before the expiry of that time (Sec.35). created by agreement express relationship of agency arises
18. 5. Contingent contract to do or not to do anything, if an impossible event happens, whenever one person called Agent has authority to act on behalf of another called
are void, whether or not the fact is known to the parties (Sec.36). Principal.
19. A contract to pay B a sum of money, if B marries C. C died without being married 3. Essentials of contract of Agency
to B. 4. 1. The relationship of an agency is based upon a contract
The contract becomes void. Back 5. .2. The contract may be either express or implied.
6. 3. There should be the appointment of an agent by the principal.
7. 4. The person employing the agent must himself have legal capacity or to be
competent to do the act for which he employs the agent

8. .5. The principal should confer authority on the agent to act for him.
9. 6. Relationship of the agency is based on confidence between the principal and the
agent.
10. 7. A contract of agency requires no consideration (sec 185)
11. Classification of Agents
12. 1. On the basis of authority
13. Express or implied agents
14. General, specific or universal agents
15. Agent or Sub-Agent
16. 2. On the basis of nature of work
17. Mercantile agent
18. Non-mercantile agent
19. RIGHTS, DUTIES AND LIABILITIES OF AN AGENT
20. Rights of an Agent:
21. 1. An agent is entitled to receive agreed remuneration. In the absence of any
special contract, payment for the performance of any act is not due to the agent
until the completion of such act (Sec.219).
22. 2. A agent may retain out of any sums received on account of the principal in the
business of agency, or all money due to himself respect of advance made or
expenses properly incurred by him in conducting such business and also such
remuneration as may be payable to him for acting as agent (Sec.217).
23. 3. the absence of any contract to the contrary, the agent is entitled to particular lien
i.e., right to retain goods, papers (documents) and other property, whether movable
or immovable, of the principal received by him, until the amount due to himself
for commission, disbursements and services in respect of the same has been paid
or accounted for him (Sec.221).
24. 4. Under certain circumstances, an agent can stop the goods in transit.
25. 5. The employer of an agent is bound to idemnity him against the consequences of
all lawful acts done by such agent in exercise of authority conferred upon him.
(Sec.222).
26. 6. The principal must pay compensation to his agent in respect of injury caused to
27. Duties of an Agent:
28. 1. To follow the instructions of the principal.
29. 2. To work with reasonable skill and diligence.
30. 3. To render proper accounts.
31. 4. To communicate with the principal in difficult situations.
32. 5. Not to deal on his own account.6. To pay all sums.
6Not to set up adverse
7 Not to delegate his authority
8 Not to use agency information against Principal.
9 insanity.
10 Not to put himself in position where interest and duty conflict.
33. Misrepresentation and fraud by Agents:
34. Misrepresentation made or frauds committed, by agents acting in the course of
their business for their principals have the same effect on agreements made by
such agents as if such misrepresentations or frauds had been made or committed
by the principals. But misrepresentation made, or frauds committed, by agents, in
matters which do not fall within the scope of authority, do not affect their principal
(Sec.238). Money received by agent by playing fraud on third person: Where an
agent received the money from the third person by fraud and paid it to the
principal, the third cannot sue the principal unless the latter aware of the fraud or
had means of knowing
35. Implied Agency: Includes
36. A. Agency by estoppel: An agency may be implied from the conduct of the
parties, though no express authority has been given.
37. B. Agency by holding out: Where a person permits another by a long course of
conduct to pledge his credit for certain purposes, he is bound by the act of such
person in pledging his credit for similar purposes.
38. C. Agency by necessity: sometimes extraordinary circumstances require that a
person who is not really an agent should act as an agent of another.
39. AGENCY BY RATIFICATION
approval of a previous unauthorized act or acts relating to a contract.
40. TERMINATION OF AGENCY
41. Agency may be terminated in the same manner as any other By the
42. Termination of agency by acts of the parties
43. 1. By agreement between principal and agent
44.
45. 3. By renunciation of business by the agent
46. 17. Termination of agency by operating of law
47. 1. By performance of the contract of agency
48. 2. By efflux of time
49. 3. By death or insanity of the agent or principal
50. 4. By the insolvency of the principal and in some cases that of the agent
51. 5. By the destruction of the subject matter of agency
52. 6. Where the principal or the agent is an incorporated company by its dissolution
53. 7. By the principal becoming an alien enemy
54. . Effect of Termination As between the principal and the agent
55. , termination of agency is effective only when it becomes known to the agent, but
so far as third parties are concerned, termination of agency takes effect when it is
known to them
56. Irrevocable agency
57. When a agency cannot be terminated is said to be an irrevocable agency
Circumstances when the agency is irrevocable Where the agent When the agency
Where the agent has partly is coupled with has incurred a exercised his interest
personal liability authority
58. Power of Attorney
59. A Power of Attorney is an instrument or a deed by which a person is empowered
to act for and in the name of the person executing it. The person executing the
deed is known as the Principal or donor and the one in whose favour it is executed
is the agent, or the power agent or the power of attorney agent
BAILMENT
1. BAILEE AND BAILOR
 BAILEE A person with whom some article is left, who is responsible for the safe
return of the article to the owner when the contract is fulfilled. These can include
banks storage companies where furniture or files are deposited, a parking garage,
or a kennel or horse ranch where a nimal is boarded.
2. BAILOR One who places control over or possession of pers onal property in the
hands of another, a bailee, for its ca re, safekeeping, or use, in accordance to the
terms of
3. BAILMENT Process of placing personal property or goods in the temporary
custody or control of another. For a valid bailment, it is necessary that bailee must
have actual physical control of the property with the intent to possess it. The bailee
is generally not entitled to the use of the property during his possession. A bailor
can demand for return of the property at any time.
4. DUTIES OF A BAILEE
5. 1. Care of Goods It is the duty of the bailee that he should take as much care of the
goods as a man of ordinary prudence takes care about his own goods.
6. 2. Act According The Bailment Any act of the bailee should not be against the
conditions of the contract. Otherwise contract will be voidable at the option of the
bailor.
7. 3. Mixing is Not Allowed It is the duty of the bailee that he should keep the bailor
goods separate from his own goods. If he mixed without the consent of the bailor
then he himself will bear the expenses of separation and loss.
8. 4. Should Not Deny The Title It is the duty of the bailee that he should not deny or
change the title of the bailor about the ownership of goods.
9. 5. Default of Responsibility It is the duty of the bailee that he should not deny or
change the title of the bailor about the ownership of goods.
10. 6. Return of Goods It is the duty of the bailee to return or deliver the goods bailed
according to the bailors conditions.
11. 7. Return at Proper Time It is the duty of the bailee that he should return the goods
bailed as the time or purpose of bailment completes without the demand of the
bailor.
12. 8. Return of Profit It is also the duty of the bailee that he should deliver the profit
or any increase occurred in the bailed goods to the bailor.
13. 9. Proper Use of Goods It is the duty of the bailee that he should use the goods
according the conditions of the contract. If he misuses the goods then he will
compensate the loss to the bailor.
14. RIGHTS OF THE BAILEE Bailee has right to claim compensation for
injuries arising out of faults present in goods, If it is gratuitous bailment, bailee
can make bailer answerable with regard to known faults only. But not to un-known
faults. In case of Non-gratuitous bailment bailee can make bailer answerable to
known as well as un-known faults.
15. Bailee has right to claim contribution for expenses. If it is Gratuitous bailment,
bailee can claim only extraordinary expenses. But in case of Non-Gratuitous
bailment, bailee can claim both ordinary and ordinary expenses. In case where
bailer has given goods with defective title and bailee, therefore, comes across
suffering, then such bailee has right to get compensated by defective titled bailer.
16. Bailee has right of indemnity, for making involvement in bailment Contract,
bailer can make bailee answerable. Bailee has right of lien. It is only particular
lien. That means he can exercise right of lien against those goods only on which
In case of death of surety, the guarantee is revoked for all the future transactions
(section 131).
When there is a change in terms and condition of the contract between the creditor
and principal debtor without obtaining the consent of surety. The surety will be
discharged of all the transactions taking place after such change in terms
and condition (section 133). For example Q rents his house to R at a fixed rent, P
becomes surety for rent payable by R to Q. R and Q agree on a higher rent for which
they
such change in contract.
In case the creditor releases the debtor or makes any omission due to which results in
When the principal debtor makes payment of debt.
When the creditor enters into an arrangement with the principal debtor for not to sue
him or to provide extra time for payment of debt, the surety will be discharged
(section 135).
The surety will be discharged when the creditor does any act which is inconsistent
with the rights of surety.
Voidable Contract
enforceable by law at the option of one or more of the parties thereto, but not at the option of
around but consider the following example:
Suppose a person A agrees to pay a sum of Rs. 10,0000 to a person B for an antique chair.
enter a contract.
Void Agreement
A void agreement definition would be an agreement with no legal value. Legally, a void
agreement means the contract or agreement is no longer enforceable.3 min read
A void agreement definition would be an agreement or contrac with no legal value.
Legally, a void agreement means the contract or agreement is no longer enforceable.
While precise definitions vary by jurisdiction, void agreements are generally categorized
as being void from the beginning and were never valid at any point. On the other hand,
void contracts are generally defined to have been valid at one time, but are now invalid.
However, despite those precise definitions existing, the terms are most often used
interchangeably.
What is a Breach of Contract?
amount is due. Bailee can return the goods to any one of the joint owners. In
times of need Bailee has right to approach Court of law
Duties of a bailor
Duties of a bailor are as follows:
1. It is the duty of a bailor to disclose all faults. If bailor fails to disclose such faults then
he will be responsible for the damage caused to goods or loss suffered by the bailee.
2. Also, the bailor is under the duty to pay the extraordinary expenses incurred by the
bailee for such bailment.
3. It is the duty of the bailor to accept the goods after the purpose for which such goods
were bailed is accomplished.
4. It is the duty of the bailor to indemnify the bailee for the cost incurred due to the
defective title of goods bailed to the bailee.
Surety
Surety: A surety is a person giving a guarantee in a contract of guarantee. A person who
takes responsibility to pay a sum of money, perform any duty for another person in case that
person fails to perform such work.
the liability of a surety is co-
provides.
Liability of surety is same as that of the principal debtor. A creditor can directly proceed
against the surety. A creditor can sue the surety directly without sueing principal debtor.
Surety becomes liable to make payment immediately when the principal debtor makes
default in such payment.
secondary. Also, where the principal debtor cannot be held liable for any payment due to
any defect in documents, then surety is also not responsible for such payment.
Discharge of a surety
By giving notice of revocation for future transactions (section 130).
A business contract creates certain obligations that are to be fulfilled by the parties who
entered into the agreement. Legally, one party's failure to fulfill any of its contractual
obligations is known as a "breach" of the contract. Depending on the specifics, a breach
can occur when a party fails to perform on time, does not perform in accordance with the
terms of the agreement, or does not perform at all.
Consequences of Breach of Contract in General
When one of the parties fails to perform its contractual obligations, such party is in breach
of contract and the other party has a right to demand the fulfillment of the agreement and
to demand performance of those obligations with the help of the authorities. However, it
is not always possible or even viable from the point of view of the damaged party to
demand that the other party perform the original contract. It may be better to demand
other consequences.
The consequences of a breach of contract vary and are dependent on which party is in
breach of its obligations. Naturally, the seriousness of the breach also affects the
consequences. The common consequence is reduction of the contract price, remedy of the
defect, compensation for damage and interest for delay. It is only possible to rescind the
contract when the breach is fundamental.
The parties may also agree on the consequences of the breach of agreement when making
a contract or separately. It might be reasonable to agree on liquidated damages for delay
for example. See more about the liquidated damages in paragraph
Remedies for a Breach of Contract
When an individual or business breaches a contract, the other party to the agreement is
entitled to relief (or a "remedy") under the law. The main remedies for a breach of
contract are:
1. Damages,
2. Specific Performance, or
3. Cancellation and Restitution
Damages
The payment of damages -- payment in one form or another -- is the most common
remedy for a breach of contract. There are many kinds of damages, including the
following:
1. Compensatory damages aim to put the non-breaching party in the position that
they had been if the breach had not occurred.
2. Punitive damages are payments that the breaching party must make, above and
beyond the point that would fully compensate the non-breaching party. Punitive
damages are meant to punish a wrongful party for particularly wrongful acts, and
are rarely awarded in the business contracts setting.
 3. Nominal damages are token damages awarded when a breach occurred, but no
actual money loss to the non-breaching party was proven.
4. Liquidated damages are specific damages that were previously identified by the
parties in the contract itself, in the event that the contract is breached. Liquidated
damages should be a reasonable estimate of actual damages that might result from
a breach.
Specific Performance
If damages are inadequate as a legal remedy, the non-breaching party may seek an
alternative remedy called specific performance. Specific performance is best described as
the breaching party's court-ordered performance of duty under the contract. Specific
performance may be used as a remedy for breach of contract if the subject matter of the
agreement is rare or unique, and damages would not suffice to place the non-breaching
party in as good a position as they would have been had the breach not occurred.
Cancellation and Restitution
A non-breaching party may cancel the contract and sue for restitution if the non-
breaching party has given a benefit to the breaching party. "Restitution" as a contract
remedy means that the non-breaching party is put back in the position it was in prior to
the breach, while "cancellation" of the contract voids the contract and relieves all parties
of any obligation under the agreement.
Acceptance
The Contract Act 1872 the
proposal has been made signifies his assent thereto, the offer is said to be accepted. Thus, the
So as the definition states, when the offeree to whom the proposal is made, unconditionally
accepts the offer it will amount to acceptance. After such an offer is accepted the offer
becomes a promise.Say for example
such an offer. Now, this has become
a promise.When the proposal is accepted and it becomes a proposal it also becomes
irrevocable. An offer does not create any legal obligations, but after the offer is accepted it
becomes a promise. And a promise is irrevocable because it creates legal obligations between
parties. An offer can be revoked before it is accepted. But once acceptance is communicated
it cannot be revoked or withdrawn.
Rules regarding Valid Acceptance
1] Acceptance can only be given to whom the offer was made
Section 8 of the Indian Contract Act 1872, provides that acceptance by conduct or actions of
the promisee is acceptable. So if a person performs certain actions that communicate that he
has accepted the offer, such implied acceptance is permissible. So if A agrees to buy from B
100 bales of hay for 1000/- and B sends over the goods, his actions will imply he has accepted
the offer.
ESSENTIAL ELEMENTS OF A VALID CONTRACT
1. . All Contracts are agreements but all agreements are not contracts. Only that
agreements which is enforceable by law is a contract. An agreement, to be
enforceable by law, must posses the essential elements of a valid contract as
contained in section 10 of the Indian Contract Act. According to Section 10,
"All agreements are contract if they are made by the free consent of the parties,
competent to contract, for a lawful consideration and with a lawful object and are
not expressly declared to be void.
2. The essential elements of a valid contract are:
3. 1. Proper Offer and Proper Acceptance. In order to create a valid contract, there
must be a 'lawful offer' by one party and 'lawful acceptance' of the same by the
other party. Section 2 (a) of the Contract Act defines Offer as
signifies to another his willingness to do or to abstain from doing anything, with a
view to obtaining the assent of that other to such act or abstinence, he is said to
whom the offer is made signifies his assent there to, the offer is said to be
accepted.
4. 2. Intention to Create Legal Relationship. In case, there is no such intention on
the part of parties, there is no contract. Agreements of social or domestic nature do
not contemplate legal relations. Case :- Balfour vs. Balfour(1919) Mr. Balfour and
his wife went to England for a vacation, and his wife became ill and needed
medical attention. They made an agreement that Mrs. Balfour was to remain
behind in England when the husband returned to Ceylon (Sri Lanka) and that Mr.
Balfour would pay her £30 a month until she returned. This understanding was
made while their relationship was fine; however the relationship later soured. The
lower court found that there was sufficient consideration in the consent of Mrs.
Balfour and thus found the contract binding, which Mr. Balfour appealed.
Arrangements made between husbands and wives are not generally contracts as
the parties do not intend to be legally bound by the agreements.
5. 3.Lawful Consideration. At the desire of promise, promisee or any other person
has done or abstain from doing or does abstain from doing such act or promises is
known as consideration. According to Blackstone "Consideration is recompense
given by the party contracting to another." In other words of Pollock,
"Consideration is the price for which the promise of the another is brought."
Consideration is known as quid pro-quo or something in return. It may be cash,
kind, act or abstinence and may be in past, present or future. It should be unlawful,
immoral and against the public policy.
6. 4. Competent of parties. The parties to an agreement must be competent. If
either of the parties does not have the ability to contract, the contract is not valid.
According to the following persons are incompetent to contract. (a) Minor: A
In the case of a specific proposal or offer, it can only be accepted by the person it was made
to. No third person without the knowledge of the offeree can accept the offer.Let us take the
example of the case study of Boulton v. Jones. Boulton bought Broc business but
Brocklehurst did not inform all his creditors about the same. Jones, a creditor of Brocklehurst
placed an order with him. Boulton accepted and supplied the goods. Jones refused to pay since
he had debts to settle with Brocklehurst. It was held that since the offer was never made to
Boulton, he cannot accept the offer and there is no contract.
When the proposal is a general offer, then anyone with knowledge of the offer can accept it.
2] It has to be absolute and unqualified
Acceptance must be unconditional and absolute. There cannot be conditional acceptance, that
would amount to a counteroffer which nullifies the original offer. Let us see an example. A
offer to sell his cycle to B for 2000/-. B says he accepts if A will sell it for 1500/-. This does
not amount to the offer being accepted, it will count as a counteroffer. Also, it must be
expressed in a prescribed manner. If no such prescribed manner is described then it must be
expressed in the normal and reasonable manner, i.e. as it would be in the normal course of
business. Implied acceptance can also be given through some conduct, act, etc. However,
the law does not allow silence to be a form of acceptance. So, the offeror cannot say if no
answer is received the offer will be deemed as accepted.
3] Acceptance must be communicated
For a proposal to become a contract, the acceptance of such a proposal must be communicated
to the promisor. The communication must occur in the prescribed form, or any such form in
the normal course of business if no specific form has been prescribed. Further, when the
offeree accepts the proposal, he must have known that an offer was made. He cannot
communicate acceptance without knowledge of the offer. So, when A offers to supply B with
goods, and B is agreeable to all the terms. He writes a letter to accept the offer but forgets to
post the letter. So, since the acceptance is not communicated, it is not valid.
4] It must be in the prescribed mode
Acceptance of the offer must be in the prescribed manner that is demanded by the offeror. If
no such manner is prescribed, it must be in a reasonable manner that would be employed in
the normal course of business. But if the offeror does not insist on the manner after the offer
has been accepted in another manner, it will be presumed he has consented to such acceptance.
So, A offers to sell his farm to B for ten lakhs. He asks B to communicate his answer via post.
B e-mails A accepting his offer. Now A can ask B to send the answer through the prescribed
manner. But if A fails to do so, it means he has accepted the acceptance of B and a promise is
made.
5] Implied Acceptance
person less than age of 18 is minor. (b) Unsound mind person: Any person who is
unable to understand the term and condition of contract at the time of its formation
is unsound mind. (c) persons disqualified by law to which they are subject.
7. 5. Free Consent. 'Consent' means the parties must have agreed upon the same
thing in the same sense. According to Section 14, Consent is said to be free when
it is not caused by- (1) Coercion (2) Undue influence (3) Fraud (4) Mis-
representation (5) Mistake. An agreement should be made by the free consent of
the parties.
8. 6. Lawful Object. The object of an agreement must be valid. Object has nothing
to do with consideration. It means the purpose or design of the contract. Thus,
when one hires a house for use as a gambling house, the object of the contract is to
run a gambling house. The Object is said to be unlawful if- (a) it is forbidden by
law; (b) it is of such nature that if permitted it would defeat the provision of any
law; (c) it is fraudulent; (d) it involves an injury to the person or property of any
other; (e) the court regards it as immoral or opposed to public policy.
9. 7. Certainty of Meaning. According to Section 29,"Agreement the meaning of
to sell to B a 100 tonne of oil, there is nothing to show what kind of oil intended,
the agreement is void due to the absence of certainty. But if A is dealer of coconut
o
show the kind of oil, and this will be a valid contract.
10. 8. Possibility of Performance. Condition for a contract should be capable for
performance .If the act is impossible in itself, physically or legally, if cannot be
enforced at law. For example: If A and B makes an agreement that if B encloses a
space with the help of two straight lines then A will pay him Rs. 1000 otherwise B
will be liable for paying Rs. 500 to A. RESULT: This is an impossible work. Two
straight lines can not enclose a space , hence contract is not valid.
11. 9. Not Declared to be void or Illegal. The agreement though satisfying all the
conditions for a valid contract must not have been expressly declared void by any
law in force in the country. Agreements mentioned in Section 24 to 30 of the Act
have been expressly declared to be void. For example agreements in restraint of
trade, marriage, legal proceedings etc. That is : If A is not willing to marry with B,
law can not enforce him/her.
12. 10. Legal Formalities. An oral Contract is a perfectly valid contract, expect in
those cases where writing, registration etc. is required by some statute. In India
writing is required in cases of sale, mortgage, lease and gift of immovable
property, negotiable instruments; memorandum and articles of association of a
company, etc. Registration is required in cases of documents coming within the
scope of section 17 of the Registration Act. All the elements mentioned above
must be in order to make a valid contract. If any one of them is absent the
agreement does not become a contract.