Chapter 5: Contingent Contracts

Question 1

Define “Contingent Contract”.

Answer 1

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.
Examples include Insurance Contracts and Indemnity and Guarantee Contracts.

[Chapter 5 LO 1]

Question 2

What are Features/Characteristics of a Contingent Contract?

Answer 2

1. Future Event.
2. Collateral Event.
3. Uncertain Event

[Chapter 5 LO 1]

Question 3

List down the points of difference between Wagering Agreement and Contingent Contract.

Answer 3

1. Validity
2. Future/Uncertain Event
3. Interest of parties
4. Reciprocal promises

[Chapter 5 LO 1]

Question 4

What are the rules regarding performance of a contract contingent upon happening of an event.

Answer 4

If time is fixed:
 Contract can be enforced only when event happens within time specified.
 Contract cannot be enforced if event becomes impossible or time passes.

If time is not fixed:
 Contract can be enforced only when event happens.
 Contract cannot be enforced if event becomes impossible.

[Chapter 5 LO 2]

Question 5

What are the rules regarding performance of a contract contingent upon non-happening of an event?

Answer 5

If time is fixed:
 Contract can be enforced only when event becomes impossible or does not happen within time specified.
 Contract cannot be enforced if even happens within time specified.

If time is not fixed:
 Contract can be enforced only when event becomes impossible.
 Contract cannot be enforced if event happens.

[Chapter 5 LO 2]