UNIT 06 CONTINGENT & QUASI CONTRACTS
- Contingent Contracts
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. The performance of the contract is conditional upon the occurrence or non-occurrence of a future, uncertain event.
For example, an insurance contract is a contingent contract: the insurer’s obligation to pay is contingent upon a specific event, like a fire, happening.
- Essentials of a Contingent Contract
Performance is conditional: The contract’s performance is dependent on the happening or non-happening of a future event.
Event is collateral: The event must be collateral to the contract. This means the event is not the main performance promised in the contract.
Event is uncertain: The event must be uncertain. If the event is certain to happen, it is not a contingent contract.
Event not a mere will of the promisor: The event should not be entirely dependent on the will of the promisor.
For example, a promise to pay if the promisor “chooses to” is not a contingent contract.
- Rules for Enforcement
Contingent on a happening event: The contract can be enforced only when the event happens. If the event becomes impossible, the contract is void.
Contingent on a non-happening event: The contract can be enforced when the happening of that event becomes impossible.
Contingent on a living person’s conduct: The event is considered impossible when the person acts in a way that makes it impossible for the event to happen.
Contingent on an impossible event: A contract contingent on an impossible event is void from the beginning, whether the parties knew about the impossibility or not.
- Quasi-Contracts
A quasi-contract is not a true contract because it lacks the essential elements of a valid contract, like offer and acceptance. Instead, it is an obligation imposed by law to prevent unjust enrichment, which means no one should be allowed to get rich at the expense of another. Quasi-contracts are based on the principles of equity, justice, and good conscience.
Types of Quasi-Contracts
The Indian Contract Act, 1872, recognizes five types of quasi-contracts:
Claim for necessaries supplied: If a person provides necessaries to a person incapable of contracting (e.g., a minor or a person of unsound mind), they can be reimbursed from that person’s property.
Payment by an interested person: A person who pays money that another person is legally bound to pay is entitled to be reimbursed.
Obligation of a person enjoying the benefit of a non-gratuitous act: If a person lawfully does something for another without intending to do so gratuitously, and the other person enjoys the benefit, the latter is bound to compensate the former.
Responsibility of a finder of goods: A person who finds goods belonging to another has the same responsibilities as a bailee, meaning they must take reasonable care of the goods and try to find the true owner.
Money paid or thing delivered by mistake or under coercion: A person to whom money has been paid or something delivered by mistake or under coercion must repay or return it.
v Difference Between a Contingent Contract and a Wagering Agreement
| Aspect | Contingent Contract | Wagering Agreement |
| Enforceability | Valid and enforceable. | Void and unenforceable. |
| Nature of Event | The uncertain event is collateral to the contract. | The uncertain event is the sole basis of the agreement. |
| Reciprocal Promises | May or may not contain reciprocal promises. | Always consists of reciprocal promises to give money or money’s worth. |
| Interest of Parties | Parties have a genuine interest in the subject matter. | Parties have no interest in the event except for the stake/bet. |
| Example | An insurance contract is a valid contingent contract. | A bet on a cricket match is a void wagering agreement. |
| Gambling | Is not a game of chance. | Is essentially a game of chance. |