Agreements Contingent on Impossible Events
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As per Sec 36 of Indian Contract Act, 1872, Agreements contingent on impossible event are void. The Act states that “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.”
Ques: Why does section 36 of ICA,1872 have to be expressed specifically under the contingent agreement when it is a matter of void ab initio?
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The answer to this question, it’s imperative to understand the meaning of contingent contracts. Contracts in ICA are of two types, absolute and contingent. Under absolute contracts we don’t need prerequisites for the contract to become enforceable. Eg you go to a shop and pay money in return for a commodity. While in a contingent contract there has to be pre existing conditions to form a valid contract, these can be to do or not to do something for an event to happen. Eg the life insurance contract, the requirements for somebody to claim for such insurance depends on the condition that either the person should be hurt or sick or in certain condition deceased, these are the occurrences of certain events for this contract. Sec 31 of ICA defines contingent contracts, and the constituent sections are the rules related to such contracts i.e. 32 to 36. To understand this concept further we need to know the difference between a contract and an agreement. All contracts are agreements, but all agreements are not contracts. According to Sec 10 of ICA there are certain requirements for an agreement to become a contract. After satisfying these conditions an agreement becomes enforceable by law to form a contract. Agreements on the other hand can be valid or void with reference to their enforceability. Sec 32 to 35 talk about contingent contracts but only in sec 36 it’s mentioned agreements contingent on impossible grounds are void. Specifically explaining such agreements can never be contracts and are void ab initio. The clarification was necessary to save the time of the courts. The classification of every contract must depend upon a rational interpretation of the intention of the parties. For Example, promising someone to take them to the moon if they marry him is neither rational nor possible and does not depict any intention to form a legal obligation.
Section 32 of Indian Contract Act,1872 states “Enforcement of Contracts contingent on an event happening” and mentions that when a contract is based on an uncertain future event, such a contract can only be enforced by law on the happening of such event. But when such an event becomes impossible, the contract based on such an event becomes void.
Now, when we see section 36 of Indian Contract Act it states “ Agreements contingent on impossible event void”. Since Section 32 explicitly mentions that impossibility of an event makes a contract based on it void so why does the Bare Act mentions the same in Section 36.Prima facie both the sections similar to each other but on the detailed reading of Section 36, we see that this section mentions a point which is not mentioned in either Section 32 or in the subsequent sections which mentions about contingent contracts. The point which differs this section from the other sections is that it talks about knowledge about the impossibility of the event by the parties to the contract. Section 36 says that when the event on which the contract is based becomes impossible, it makes the said contract void. Further, it also mentions that the voidability of the contract will not depend on the fact whether the parties knew about the impossibility of that event at the time of making such contract or not. Here the knowledge about the impossibility of the event would be immaterial and such a contract would anyhow be void.
When an agreement is made on an impossible act or event including the matter of inherent then as per the nature it is to be declared not a contingent contract and hence void. For example, If a shipowner agrees to pay some money to an agent in order to bring back his wrecked ship from the ocean which is definitely void in terms of the contingent contract. A contingent contract based on the possibility of either the happening or non-happening of an event clearly ruling out the impossibility of the happening and non-happening of the event or act. Prima facie comes when enforcement of the contingent contract is enforceable by law on such happening on the specified date and the impracticality of Occurrence is a subject of the matter leads the contract to be void. Section 36 of the Indian Contract Act,1872 is under the head of contingent agreement stating clearly that it has never been void ab initio at instance because as the parties knowledge about the unobtainable on the facts of the agreement does not make a prime factor at the time of making the contract which makes it void. Section 32 mentioned the events for the contingent contract occurring and the similar exception mentioned in section 36 is a noticeable matter of judgment.
-> As per Section 31 of ICA,1872, Contingent contracts are made on basis of collateral conditions. The contracts are said to contingent when the contract is dependent or conditional upon happening or non-happening of a certain future event.
–> As per Section 36 of ICA, 1872, Contingent contract made over truly impossible condition or future event is considered void. It does not matter whether the parties are aware about the degree of impossibility or not.
-> As the agreement is made over an impossible condition the agreement should fall under “void ab initio”, but in ICA, 1872 it was given a specific section (Section 36) under classification of contingent contract because of the following reasons
– 1) At the time of agreement, the degree of impossibility of the collateral conditions may be unknown to the parties.
– 2) Even though the condition is impossible, still as per the definition of Contingent Contract in Section 31 of ICA, 1872, it still satisfies collateral condition criteria.
– 3) These types of agreements do occur in real life conditions, under certain influenced condition.
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