Contingent Contract and Quasi Contract -Meaning & Rules Relating, Indian Contract Act 1872 Notes

Contingent Contract and Quasi Contract -Meaning & Rules Relating
Indian Contract Act 1872 Notes

Contingent Contract Meaning

According to the Contract Act a contingent contract is one whose performance us uncertain. The performance of the contract which comes under this category depends on the happening or non- happening of certain uncertain-events. On the other hand, an ordinary or absolute contract is such where performance is certain or absolute in itself and not dependent on the happening or non-happening of an event. A contingent contract is defined as a contract to do or not to do something, if some event, collateral to such contract, does or does not happen (sec. 31).

Example

(A) A contracts to pay Rs. 50,000 if B’s house is destroyed by five. This is a contingent contract as the performance depends on the happening of an event.

(B) A asks B to give loan to M and promises that he (A) will repay the loan if M does not return it in time.

Characteristics of a Contingent Contract: 

A Contingent Contract must have three essential characteristics. There are:

(1)  The performance of the contract depends on the happening or non-happening of a certain event in future. This dependence on a probable future event distinguishes a contingent contract from an ordinary contract.

(2)  This event must be uncertain, that means happening or non-happening of the future event is not certain, i.e., it may or may not happen. If the event is hundred percent sure to happen, and the contract in that case has to be performed any way, such a contract is not called a contingent contract.

(3)  The event must be collateral or incident to the contract. Therefore, contracts of indemnity, guarantee and insurance are the most common instances of a contingent contract.

Rules regarding contingent contracts: 

To enforce the performance of a contingent contract the following rules have to be followed:

1.    Where the performance of a contingent depends on the happening of an uncertain future event, it cannot be enforced till the event takes place. And if the happening of the event becomes impossible, such contracts become void (sec. 32). Example- A contracts to sell B a piece of land if he (A) wins the legal case involving that piece of land. A loses the case. The contract becomes void.

2.    Where the performance of a contingent contract depends on the non-happening of a future event, the contract can be enforced if the happening becomes impossible (sec. 33). Example- A agrees to sell his house to B if Y dies. This contract cannot be enforced till Y is alive.

3.    If the contract is dependent on the manner in which a person will act at an unspecified time, the event shall be considered to become impossible when such person does anything which makes it impossible that he should so act within any definite time or otherwise than under further contingencies (sec. 34). 

4.    Contingent contract to do or not to do anything, if a specified uncertain event happens within a fixed time, becomes void if the event does not happen and the time expires or its happening becomes impossible before the time expires [sec. 35(1)].

5.    Contingent contract to do or not to do anything, if a specific event does not happen within a specified time, may be enforced when the time so specified expires and such event does not happen, or before the time so specified it becomes certain that such event will not happen [sec. 35(1)].

6.    Contingent agreements to do or not to do anything, if an impossible event happens, are void, whether or not the fact is known to the parties at the time when it is made (sec. 36). 

Quasi Contract

It means a contract which lacks one or more of the essentials of a contract. In a contract, a promisor voluntarily undertakes an obligation in favour of the promisee. When a similar obligation is imposed by law upon a person for the benefit of another even in the absence of a contract. Such contracts are the quasi-contracts. Quasi contract is declared by law as valid contracts on the basis of principles of equity i.e. no person shall be allowed to enrich himself at the expense of another the legal obligations of parties remains same.

Nature of Quasi contracts:

a) A quasi contract does not arise from any formal agreement but is imposed by law.

b) Every quasi contract based upon the principle of equity and good conscience.

c) A quasi contract is always a right to money and generally though not always to a liquidated sum of money.

d) A suit for its breach may be filed in the same way as in case of a complete contract.

e) The right grouted to a party under a quasi contract is not available to him against the whole world but against particular person(s) only.

f) A suit for breach of a quasi contract may be filed in the same way as in case of an ordinary contract

g) Although there is no contract between the parties under a quasi contract, yet they are put in the same position as if he were a contract between them.

Types of Quasi Contracts

a) Claim for necessaries supplied to persons incapable of contracting (Sec. 68): If a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person, with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person.

b) Right to recover money paid for another person (Section 69): A person who has paid a sum of money which another is obliged to pay, is entitled to be reimbursed by that other person provided the payment has been made by him to protect his own interest.

c) Obligation of a person enjoying benefits of non-gratuitous act (Section 70): Where, a person does some act or delivers something lawfully to another person with the intention of receiving payments for the same, in such a case, the other person is bound to make payment if he accepts such services or goods or enjoys their benefit.

d) Responsibility of a finder of goods (Sec.71): A person who finds goods belonging to another and takes them into his custody is subject to the same responsibility as a bailee. Therefore, he is required:

Ø  to take proper care of the thing found as his own goods

Ø  not to appropriate it to his own use,

Ø  to restore it to the owner when the owner is traced.

Right of finder

Ø  Finder is entitled to retain it against whole world.

Ø  Finder has lien for express incurred in preserving goods & finding true owner.

Ø  However, he cannot file suit for recovery of this money.

Ø  It he can claim recovered. If it was offered.

Ø  If true owners refuse9s to pay lawful charge he May Sale.

a)       When goods are of perishable nature.

b)      When lawful charge amount to two third of its values or more.

e) Liability for money paid or thing delivered by mistake or under coercion (Sec. 72): A person to whom money has been paid, or anything delivered, by mistake or under coercion must repay or return it.

In each of the above cases, contractual liability is the creation of law and does not depend upon any mutual agreement between the parties.