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.
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