Q.
In a Contingent Contract, what would happen if the event is impossible to be carried out? The scenario below is referred.
Allan is a car salesman. Allan sold a second hand car Toyata VIOS to Fahan with the condition that the car is inspected for roadworthy by the authority.
However, when Allan get the inspection done by the authority, it was found out that the car had been a theft item. Thus, impossible to get inspection and certification of fitness.
Advice Allan and Fahan.
A.
See contingent contracts here and
Scenario 1 here,
Scenario 2 here, and
Scenario 3 here,
This is a contingent contract as there is an event (inspection) to be carried out before the enforcement of the contract (sale of car).
It is a contract that have some negotiation in between, if you do this ... I will do this ...
So, to Fahan, he will purchase the car Toyota VIOS if Allan could get the inspection approval by the authority.
S.32 of Contracts Act, 1950 specify Contingent Contract as:
A "Contingent Contract" is a contract to do or not to do something, if some event, collateral to the contract, does or does not happen.
In the case above, the collateral event is 'inspection and approval by authority', and the Contingent Contract is the contract of sale of Toyota VIOS.
As Allan could not get the approval from the inspection authority, the contract to purchase the car is void. It is impossible to get any approval when the car is found to be a theft item.
This is specified by S.37 of Contracts Act, 1950.
S.37 Agreement contingent on impossible events void.
Contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made.
Ref:
S.32 and S.37 Contracts Act, 1950.
Earlier posts.