UNIT – EIGHT

CONTINGENT CONTRACTS

On the basis of area of performance of contracts, generally contracts can be classified into two
categories, absolute or contingent.

1. Absolute contract
If is a contract in which the parties must perform their promises in all events.
2. Contingent contract
It is a contract to do or not to do something if some event, collateral to such contract does or
does not happen.

Essential characteristics of a contingent contract

1. There must be a contract to do or not to do something.
2. It must depend on the happening or non-happening of an uncertain event.
3. The event must be collateral to the contract.

Rules regarding contingent contracts

1. Contingent contracts on the happening of an event

2. Contracts dependent on the non-happening of an event.
3. Contracts contingent upon the future conduct of a person.
4. Contracts contingent upon happening of a specified event within a fixed time.
5. Contracts contingent upon non-happening of a specified event within a fixed time.
6. Contracts contingent upon the happening of an impossible event.

Differences between wagering agreement and contingent contract.

1. Wagering agreement consists of reciprocal promises.

A contingent contract may not contain reciprocal promises.
2. In a wagering agreement the parties have no other interest in the subject matter of the
agreement except the winning or losing of the amount of the wager.
In a contingent contract parties may have some interest in the subject matter.
3. Wagering agreements are contingent in nature.
Contingent contracts are not wagering in nature.
4. A wagering agreement is void.
A contingent contract is valid.