Pt. Deen Dayal Upadhyay Management College

According to Section 31 of Indian Contract Act, 1872 “a contingent contract is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen”. Contingent contract is a contract in which promise is conditional and the contract shall be performed only on the happening or non happening of some future uncertain event. For Example: Mr. A agrees to pay Mr. B Rs. 50,000 if Mr. B’s house is burnt. This is contingent contract. Mr. A’s liability arises only on the occurring of the condition collateral to the contract.   The contracts of indemnity, guarantee and insurance have one thing in common that they create an obligation on the promisor if an event which is collateral to the contract does or does not happen.

This principle was given by Douglas McGregor. The central idea of the principle is that the employee discipline can be maintained by punishing employees for breach of discipline in manner similar to touching a hot stove and therefore a disciplinary action should have  the following consequences: (a) Burns Immediately: If disciplinary action must be taken   immediately so the individual will understand the reason for it. As with the hot stove when we touch it, our hand burns immediately.  (b) Provides Prior Warning: It is very important to provide advance warning that punishment will follow an act of indiscipline. As you move closer to hot stove, you are warned by its heat that you will be burned if you touch it. (c) Gives Consistent   Punishment: If you touch the hot stove, you get burned no matter how many times you touch it. Therefore, indiscipline should be punished every time. (d) Burns Impersonally: Disciplinary action should be impersonal. There ...