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A contracts to pay to B Rs. 10,000 if B's house is burnt. This is a contingent contract.
(1) There must be a contract between the parties.
(2) The contract must be to do or not to do something.
(3) The doing or not doing something must be depending upon happening or not happening of some collateral event.
(4) The collateral event must be of future event, and
(5) Ordinarily, the happening or not happening of event must not be under the control of parties. Some cases may constitute exception. However, the event must not be of impossible character.
In a contingent contract, there should be some event collateral to the contract. If the event consist in the performance of the contract itself by one party it is not a contingent contract. For instance-A announces a reward of Rs. 100 to be paid to anyone who finds his lost dog. B finds the dog. B's act of finding the dog is acceptance of the offer as well as the performance of the contract. This contract is not a contingent contract.
If the event becomes impossible, such contracts becomes void.
Illustrations
(a) A makes a contract with B to buy B's horse 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 horse to B at a specified price if C to whom the horse has been offered refuses to buy him. The contract cannot be enforced by law unless and until C refuses to buy the horse.
(c) A contracts to pay B a sum of money when B marries C. C dies without being married to B. The contract becomes void.
V.P. Desa v. Union of India, MANU/MP/0111/1958 : AIR 1958 MP 297: where a car was insured against loss in transit, the car was damaged without being put in the course of transit, the insurer was held to be not liable.
Illustrations
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.
Illustrations
A agrees to pay B a sum of money if B marries C. C marries D. The marriage of B to C must now be considered impossible, although it is possible that D may die and that C may afterwards marry B.
Pym v. Compbell, (1856) 6 E&B 370: Where there was a written agreement to buy the benefits of plaintiff's invention if it was approved by the engineer, it was held that there was no concluded contract because the invention was not approved by the engineer.
Frast v. Knight, (1872) LR 7 Exch 111: The defendant promised to marry the plaintiff on the death of his father, while the father was still alive, he married another woman, it was held that it had become impossible that he should marry the plaintiff and she was entitled to sue him for the breach of the contract.
Illustrations
(a) A promises to pay B a sum of money if a certain ship returns within a year. The contract may be enforced if the ship returns within the year and becomes void if the ship is burnt within the year.
(b) A promises to pay B a sum of money if a certain ship does not return within a year. The contract may be enforced if the ship does not return within the year, or in burnt within the year.
Illustrations
(a) A agrees to pay B 1000 rupees if two straight lines should enclose a space. The agreement is void.
(b) A agrees to pay 1000 rupees if B will marry A's daughter C. C was dead at the time of the agreement. The agreement is void.
Promises bind the representatives of the promisors in case of the death of such promisors before performance, unless a contrary intention appears from the contract.
Illustrations
(a) A promises to deliver goods to B on a certain day on payment of Rs. 1000. A dies before that day. A's representatives are bound to deliver the goods to B and B is bound to pay the Rs. 1000 to A's representatives.
(b) A promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The contract cannot be enforced either by A's representatives or by B.
Basanti Rai v. Profulla Kumar Routral, (2006) Cut LT: If the contract is legal and enforceable, then even if one of the parties to the contract dies leaving no heir, the persons, who acquired interest over the subject-matter of the contract through that deceased party would be bound by the contract and specific performance can be enforced against such persons.
Syndicate Bank v. R. Veeranna, MANU/SC/1193/2002 : (2003) 2 SCC 15: If the agreement makes express provision for enhancement of rate of interest, held bank need not put borrower on notice before changing higher rate on the basis of the agreement.
Harnam Singh v. Purbi Devi, MANU/HP/0016/2000 : AIR 2000 HP 108: A person cannot be subject to the obligation of a contract to which he is not a party and the logical consequence is that a stranger cannot acquire rights under a contract.
Every such offer must fulfil the following conditions,-
(1) it must be unconditional,
(2) it must be made at a proper time and place, and under such circumstances that the person to whom it is made may have a reasonable opportunity of ascertaining that the person by whom it is made is able and willing there and then to do the whole of what is bound by his promise to do,
(3) if the offer is an offer to deliver anything to the promisee, the promisee must have a reasonable opportunity of seeing that the thing offered is the thing which the promisor is bound by his promise to deliver.
An offer to one of several joint promisee has the same legal consequences as an offer to all of them.
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A contracts to deliver to B at his warehouse, on the 1st March, 1873, 100 bales of cotton of a particular quality. In order to make an offer of performance with the effect stated in this section. A must bring the cotton to B's warehouse, on the appointed day, under such circumstances that B have a reasonable opportunity of satisfying himself that the bring offered is cotton of the quality contracted for and that there are 100 bales.
West Bengal Electricity Board v. Patel Engg Co. Ltd., AIR 2001 SC 683: Where the instructions have been issued to Bidders asking them to state against each work item unit rate in Indian currency and in U.S. Dollar or Japanese Yen. Then the quoting of the unit rate 50 per cent. In Indian Rupee and 50 per cent in U.S Dollar will not be treated as clerical or mechanical error and cannot be allowed to be corrected.
(a) A, a singer, enters into a contract with B, the manager of a theatre to sing at his theatre two nights in every week during next two months, and B engages to pay her 100 rupees for each night's performance. On the sixth night A wilfully absents herself from the theatre B is at liberty to put an end to the contract.
(b) A, a singer, enters into a contract with B, the manager of a theatre to sing at her theatre two nights in every week during next two months, and B engages to pay her at the rate of too rupees for each night. On the sixth night, A wilfully absents herself with the assent of B, A, sings on the seventh night. B has signified his acquiescence in the continuance of the contract, and cannot now put an end to it, but is entitled to compensation for the damage sustained by him through A's failure to sing on the sixth night.
Rash Behary Shaha v. Nirttya Gopal Nundy, (1906) 33 Cal 477: A agreed to purchases from B under two contracts 300 tons of sugar to be delivered at different dates. A having failed to take delivery under the first contract, B claimed to rescind both contracts.
The Calcutta High Court held that as there was no refusal on the part of A to perform his promise in its entirety within the meaning of section 39, B was not entitled to rescind the contract.
Hochester v. De La Tour, QB (1853) 2 E&B 678: The plaintiff was a courier. He was engaged by the defendant to accompany him on a tour to commence on June 1, 1852. Nearly a month before this date the defendant wrote to the plaintiff that he had changed her mind, and declined his services. The plaintiff sued him for damages for breach. The defendant's counsel very powerfully contended that there could be no breach of the agreement before the day when the performance was due.
The court ruled out the objection and observed that it cannot be laid down as universal rule that where by agreement an act is to be done at a future time no action can be brought for a breach of the agreement till the day for doing an act has arrived.
Illustrations
(a) A promises to pay B a sum of money. A may perform this promise either by personally paying the money to B or by causing it to be paid to B by another, and if A dies before the time appointed for payment her representatives must perform the promise, or employ some proper person to do so.
(b) A promise to point a picture for B, A must perform this promise personally.
If there is something in the contract to show that personal performance was intended, then the contract will have to be performed by the promisor himself. Sometimes the nature of the promise is an indication by itself that the promisor must perform personally.
Sections 42, 43, 44 of the Contract Act deal with the question of liability of the joint promisor. The following rules are contained in these sections-
Gannmani Anasuya v. Parvatini Amrendra Chowdhary, MANU/SC/7694/2007 : AIR 2007 SC 2380: If in the terms of joint business and conditions are not mentioned in writing, then it will be relvent to see the conduct of the partners in carrying on the business. In joint undertaking or ventures, the share of the partners ought to be determined according to their conduct.
Each of two or more joint promisor may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.
If anyone of two or more joint promisor makes default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.
Explanation.-Nothing in this section shall prevent a surety from recovering, from his principal, payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payment made by the principal.
Illustrations
(a) A, B and C jointly promise to pay D 3000 rupees. D may compel either A and B or C to pay him 3000 rupees.
(b) A, B and C jointly promise to pay D the sum of 3000 rupees. C is compelled to pay the whole. A is insolvent, but his assets are sufficient to pay one-half of his debts. C is entitled to receive 500 rupees from A's estate and 1250 rupees from B.
(c) A, B and C are under a joint promise to pay D 3000 rupees. C is unable to pay anything, and A is compelled to pay the whole. A is entitled to receive 1500 rupees from B.
(d) A, B and C are under a joint promise to pay D 3000 rupees. A and B being only sureties for C. C fails to pay. A and B are compelled to pay the whole sum. They are entitled to recover it from C.
King v. Hoare, (1844) 13 M&W 494: It was held that since section 43 of the Indian Contract Act permits an action against anyone of the joint promisors and debars him from pleading that the other joint promisor should be joined in the suit, it follows that there is no bar to second suit against the joint promisors, if the first one does not satisfy the claim.
Devilal v. Himatram, MANU/RH/0017/1973 : AIR 1973 Raj 39: There was an action brought against the various partners of a partnership firm for the recovery of money. During the pendency of appeal one of the respondent partner died. Since his legal representatives were not brought on record, the appeal abated against him. It was held that the abatement of the appeal against one partner did not result in the abatement of the appeal against the other respondent.
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A, in consideration of 5000 rupees lent to him by B and C promises B and C jointly to repay them that sum with interest on a day specified. B dies. The right to claim performance rests with B's representative jointly with C during C's life and after the death of C with the representative jointly with C during C's life, and after the death of C, with the representatives of B and C jointly.
Explanation.-The question 'what is a reasonable time' is each particular case, a question of fact.
Hungerford Investment Trust Ltd. v. Haridas Mandhra, AIR 1972 SC 1826: The Supreme Court held that if a contract does not specify the time for performance the law will imply that the parties intended that the obligations under the contract should be performed within a reasonable time.
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A promises to deliver goods at B's warehouse on the first January. On the day A brings the goods to B's warehouse, but after the usual hour closing it, and they are not received. A has not performed his promise.
When the promise is to be performed on a certain day, the promisor's duty in such a case is to perform the contract during the usual business hours on such day. If the goods to be delivered are supplied after the usual closing time, the buyer may reject them.
Explanation.-The question what is a proper time and place is, or each particular case, a question of fact.
Illustration
A undertakes to deliver a thousand mounds of jute to B on a fixed day. A must apply to B to appoint a reasonable place for the purpose of receiving it, and must deliver it to him at such place.
Illustrations
(a) B owes A 2,000 rupees, A desires B to pay the amount to A's account with C a banker B, who also banks with C orders the amount to be transferred from his account to A's credit, and this is done by C. Afterwards and before A knows of the transfer, C fails. There has been a good payment by B.
(b) A and B are mutually indebted. A and B settle an account by setting off one item against another, and B pays. A the balance found to be due from his upon such settlement. This amount to a payment by A and B respectively, of the sums which they owed to each other.
(c) A owes B 2000 rupees B accepts some of A's goods in reduction of the debt. The delivery of the goods operates as a part payment.
(d) A desires B who owes him Rs. 100, to send him a note for Rs. 100 by post. The debt is discharged as soon as B puts into the post a letter containing the note duly addressed to A.
Bishamber Nath Agarwal v. Kishan Chand, AIR 1990 All 70: If any agreement states that a particular act relating to the furthermore of a contract is to be done in a particular manner, it should be done in that manner and it is not open to the parties to chalk out his own manner of performing his part of contract.
Mohammad v. Pushpalatha, MANU/SC/7855/2008 : (2008) 8 SCC 335: Supreme Court has held that where landlord agreed to reconstruct the promise with toilet jointly and the tenant agreeing to pay a higher rent thereafter, but the landlord did not reconstruct the toilet the tenant would be entitled to pay the lower rent he was paying for the old structure and would be liable to pay the higher rent only after the landlord reconstructed the toilet.
Illustrations
(a) A and B contract that A shall deliver goods to B to be paid for by B on delivery. A need not deliver the goods, unless B is ready and willing to pay for the goods on delivery.
B need not pay for the goods unless A is ready and willing to deliver them on payment.
(b) A and B contract that A shall deliver goods to B at a price to be paid by instalments, the first installment to be paid on delivery.
A need not deliver, unless B is ready and willing to pay the first instalment or delivery.
B need not pay the first instalment, unless A is ready and willing to deliver the goods an payment of the first instalment.
Mohammad v. Pushpalatha, AIR 2009 SC 479: An agreement was entered into in respect of a rental property that it be reconstructed so as to include the construction of toilet also. The tenant agreed to pay higher rent after reconstruction. The said property was reconstructed but toilet facility was not constructed. The tenant was given the possession of the reconstructed properly but the tenant refused to pay the higher rent because the toilet was not reconstructed. The Supreme Court held that the tenant was not bound to pay the higher rent.
Illustrations
(a) A and B contract that A shall build a house for B at a fixed price, A's promise to build the house must be performed before B's promise to pay for it.
(b) A and B contract that A shall make over his stock in trade to B at a fixed price, and B promises to give security for the payment of the money. A's promise need not be performed until the security is given, for the nature of transaction requires that A should have security before he delivers up her stock.
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A and B contract that B shall execute certain work for A for a thousand rupees. B is ready and willing to execute the work accordingly, but A prevents him from doing so. The contract is voidable at the option of B and if he elects to rescind it, he is entitled to recover from A compensation for any loss which he has incurred by its non-performance.
Illustrations
(a) A hires B's ship to take in and convey, from Calcutta to the Mouritius, a cargo to be provided by A, B receiving a certain freight for its convey once. A does not provide any cargo for the ship. A cannot claim the performance of B's promise and must take compensation to B for the loss which B sustains by the non-performance of the contract.
(b) A contracts with B to execute certain builder's work for a fixed price, B supplying the scaffolding and timber necessary for the work. B refuses to furnish any scaffolding or timber, and the work cannot be executed. A need not execute the work, and B is bound to make compensation to A for any loss caused to him by the non-performance of the contract.
(c) A contracts with B to deliver to him, at a specified price, certain merchandise on board a ship which cannot arrive for a month, and B engages to pay for the merchandise within a week from the date of the contract. B does not pay within the week. A's promise to deliver need not be performed, and B must make compensation.
(d) A promises B to sell him, one hundred bales of merchandise, to be delivered next day and B promises A to pay for them within a month. A does not deliver according to his promise B's promise to pay need not be performed and A must make compensation.
If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time, but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.
If in case of a contract voidable an account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed unless at the time of such acceptance he gives notice to the promisor of his intention to do so.
Pundi Goudarajan v. Subas Chandra Sahu, AIR 2008 NOC: The court held that it could be said that time was essence of the contract. It was further noticed that the vendor was always ready to execute sale deed and receive sale consideration.
Whenin the agreement it was stipulated that building was to be constructed within four months. Extensions were granted several times for completion of work.
Vairavan v. K.S. Vaidyanandam, MANU/TN/0069/1996 : AIR 1996 Mad 353: There was no express stipulation making the time of performance in a sale of immovable property as essence of the contract. It was stipulated that the performance must be completed within six months by executing and registering sale deed.
Where advance was paid for agreement to sell immovable property and vendee had agreed to pay balance consideration by stipulated date and on failure advance was to be forfeited and agreement cancelled.
The term of agreement clearly indicated intention of parties that time was essence of contract.
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