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Illustrations:
A contract may be unconditional or absolute on the one hand and conditional or contingent
on the other. The absolute or unconditional contract is one without any reservations or
conditions and is to be performed under any event. On the other hand, conditional or
contingent contract is one in which a promise is conditional and the contract shall be
performed only on the happening or not happening of some future uncertain event. The
event must be collateral to the contract. The condition may be precedent or subsequent.
A collateral event is defined as one which is neither a performance directly promised as part
of the contract, nor the whole of the consideration for a promise. The event, therefore
independent of the contract and does not form part of consideration to it.
Illustrations:
(a) A makes a contract with B to buy B’s houses if A survives C. This contract cannot be
enforced by law unless and until C dies in A’s life time.
(b) A makes a contract with B to sell a house to B at a specified price, if C to whom the
house has been offered refuses to buy. The contract cannot be enforced by law unless and
until C refuses to buy the house.
(c) A contracts to pay B a sum of money when B marries C. C dies without being married to
B. The contact becomes void.
Contracts so contingent become void when the event becomes impossible. Performance of
such contract becomes impossible as the event on which the contract was contingent
becomes impossible for example, imposition of government restrictions.
Illustration:
A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk. The
contract can be enforced when the ship sinks.
If future event which a contract is contingent is the way in which a person will act at an
unspecified time, the event shall be considered to become impossible when such person
does anything which renders it impossible that he should so act within any definite time, or
otherwise than under future contingencies.
Illustration:
Contracts contingent on a specified event happening within a fixed time: (Sec 33(1))
Illustrations:
A promises to pay B a sum of money if a certain ship returns within a year. The contracts
may be enforced if the ship returns within the year, and becomes void if the ship is burnt
within the year.