Corporate And Regulatory

Contract Act, 1872 (Pt. 1 of 4)

Status: In force


Whereas it is expedient to define and amend certain parts of the law relating to contracts, it is hereby enacted as follows:-

1.            Short title. This Act may be called the Contract Act, 1872.

Extent, commencement. It extends to the whole of Pakistan; and it shall come into force on the first day of September, 1872.

Enactments repealed. Nothing herein contained shall affect the provisions of any Statute, Act or Regulation not hereby expressly repealed, nor any usage or custom of trade, nor any incident of any contract not inconsistent with the provisions of this Act.

2.            Interpretation clause. In this Act the following words and expressions are used in the following senses, unless, a contrary intention appears from the context:-

(a)          when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining -the assent of that other to such act or abstinence, he is said to make a proposal;

(b)          when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted becomes a promise;

(c)           the person making the proposal is called the 'promisor', and the person accepting the proposal is called the 'promisee';

(d)          when, at the desire of the promisor, the promisee or any other person who has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;

(e)          every promise and every set of promises, forming the consideration for each other, is an agreement;

(f)           promises which form the consideration or part of the consideration for each other called reciprocal promises;

(g)          an agreement not enforceable by law is said to be void;

(h)          an agreement enforceable by laws a contract;

(i)            an agreement which is enforceable by law of the opinion of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract; and

(j)           a contractor which ceases to be enforceable by law becomes void when it ceases to be enforceable.

CHAPTER I

OF THE COMMUNICATION, ACCEPTANCE AND REVOCATION OF PROPOSALS

3.            Communication, acceptance and revocation of proposals. The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any Act or omission of the party proposing, accepting or revoking by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it.

4.            Communication when complete. The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete,- as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor;

(a)          as against the acceptor, when it comes to the knowledge of the proposer. The communication of the revocation is complete,-

(b)          as against the person who makes it, when it is put into course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it;

(c)           as against the person to whom it is made, when it comes to his knowledge.

Illustrations

A.            proposes, by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter.

B.            accepts A's proposal by a letter sent by post. The communication of the acceptance is complete,- as against A, when the letter is posted; as against B, when the letter is received by A.

A revokes his proposal by telegram. The revocation is complete as against A when the telegram is dispatched. It is compete as against B when B receives it. B revokes his acceptance by telegram, B's revocation is complete as against B when the telegram is despatched, and as against A when it reaches him.

5.            Revocation of proposals and acceptances. A proposal may be revoked at any time before the communication of its acceptance is complete as against the proper, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but afterwards,

A.            proposes, by a letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post. A may revoke the proposal at any time before or at the moment when B posts his letter of acceptance, but not afterwards,

B.            may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards.

6.            Revocation how made. A proposal is revoked-

(1)          by the communication of notice of revocation by the proposer to the other party;

(2)          by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;

(3)          by the failure of the acceptor to fulfill a condition precedent to acceptance; or

(4)          by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.

7.            Acceptance must be absolute. In order to concert a proposal into promise, the acceptance must-

(1)          be absolute and unqualified;

(2)          be express in some usual and reasonable manner unless the proposal prescribes the manner in which it is to be accepted. If the proposal describes a manner in which it is to be accepted, and the acceptance is not made in such manner, the proper may within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but if he fails to do so, he accepts the acceptance.

8.            Acceptance by performing conditions, or receiving consideration. Performance of the conditions of a proposal, or the acceptance of any consideration for the reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.

9.            Promises, express and implied. In so far as the proposal, or acceptance of any promise is made in words, the promise is said to be express. In so far as such proposal or acceptance is made otherwise than in words, the promise is said to be implied.

CHAPTER II

OF CONTRACTS, VOIDABLE CONTRACTS AND VOID AGREEMENTS

10.          What agreements are contracts. All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in Pakistan and not hereby expressly repealed, by which any contract is required to be made in writing or the presence of witnesses, or any law relating to the registration of documents.

11.          Who are competent to contract. Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject.

12.          What is a sound mind for the purposes of contracting. A person is said to be of sound mind for the purpose of making a contract if, at the time when he makes it, he is capable of undertaking it and of forming a rational judgment as to its effect upon his interests.

A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when heirs of sound mind.

A person who is usually of sound mind, but occasionally of unsound mind, may not make a contract when he is of unsound mind.

Illustrations

(a)          A patient in a lunatic asylum; who is at intervals of sound mind, may contract during those intervals.

(b)          A sane man, who is delicious from fever or who is so drunk that he cannot understand the terms of contract or form a rational Judgment as to its effect on his interest cannot contract whilst such delirium or drunkenness lasts.

13.          'Consent' defined. Two or more persons are said to consent when they agree upon the same thing in the same sense.

14.          Free 'consent' defined. Consent is said to be free when it is not caused by-

 (1)         coercion, as defined in Section 15, or

 (2)         undue influence, as defined in Section 16, or

 (3)         fraud, as defined in Section 17, or

 (4)         misrepresentation, as defined in Section 18, or

 (5)         mistake, subject to the provisions of Sections 20, 21 and 22. Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake.

15.          'Coercion' defined. 'Coercion' is the committing, or threatening to commit, any act forbidden by the Pakistan Penal Code or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.

Explanation. It is immaterial whether the Pakistan Penal Code is or is not in force in the place where the coercion is employed.

Illustrations

A on board an English ship on the high seas. causes B to enter into an agreement by an act amounting to criminal intimidation under the Pakistan Penal Code.

A afterwards sues B for breach of contract at Karachi.

A has employed coercion although his act is not offence by the law of England, and although Section 506 of the Pakistan Penal Code was not in force at the time when or place where act was done.

16.          'Undue influence' defined. (1) A contract is said to be induced by 'undue influence' where the relation subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain unfair advantage over the other.

 (2)         In particular and without prejudice to the generality of the foregoing principle, a person .s deemed to be in a position to dominate the will of another-

 (a)         where he holds a real or apparent authority over the other or where he stands in a Fiduciary relation to the other; or

 (b)         where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, lines, or mental or bodily distress.

 (3)         Where a person who is in a position to dominate the will off another enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other. Nothing in this sub-section shall affect the provisions of Section 111 of the Evidence Act, 1872.

Illustrations

 (a)         A having advanced money to his son, B, during his minority, upon B's coming of age obtains, misuse of parental influence, a bond from B for a greater amount than the sum due in respect of the advance. A employs undue influence.

 (b)         A, a man enfeebled by disease or age, is induced, B's influence over him as his medical attendant, to agree to pay B an unreasonable sum for his professional services. B employs undue influence.

 (c)          A being in debt to B, the moneylender of his village, contracts a fresh loan on terms which appear to be unconscionable. It lies on B to prove that the contract was not induced by undue influence.

 (d)         A applies to a banker for loan at a time when there is stringency in the money market. The banker declines to make the loan except at an unusually high rate of interest. A accepts the loan on these terms. This is a transaction in the ordinary course of business, and the contract is not induced by undue influence.

17.          'Fraud' defined. 'Fraud' means and includes, any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce to enter into the contract:-

(1)          the suggestion, as a fact, of that which is not true, by on who does not believe it to be true;

(2)          the active concealment of a fact by one having knowledge or belief of the fact;

(3)          a promise made without any intention of performing it;

(4)          any other act fitted to deceive;

(5)          any such act or omission as the law specially declares to be fraudulent.

Explanation. Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is in itself, equivalent to speech.

Illustrations

 (a)         A sells, by auction to B, a horse which A knows to be unsound. A says nothing to B about the horse's unsoundness. This is not fraud in A.

 (b)         B is A's daughter and has just came of age. Here the relation between the parties would make it A's duty to tell B if the horse is unsound.

 (c)          B says to A. 'If you do not deny it, I shall assume that the horse is sound'. A say nothing. Here A's silence is equivalent to speech.

 (d)         A and B, being traders enter upon a contract. A has private information of a change in prices which would affect B's willingness to proceed with the contract. A is not bound to inform B.

18.          'Misrepresentation' defined. 'Misrepresentation' means and includes-

 (1)         the positive assertion, in a manner not warranted by the information of the person making it of that which is not true, through he believes it to be true;

 (2)         any breach of duty which, without an intent to deceive, gains advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice or to the prejudice of any one claiming under him;

 (3)         causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.

19.          Voidability of agreements without free consent. When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed and that he shall be put in the position in which he would have been if the representations made had been true.

Exception. If such consent was caused by misrepresentation, or by silence, fraudulent within the meaning of Section 17, the contract, nevertheless is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

Explanation. A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practiced, or to whom such misrepresentation was made, does not render a contract voidable.

Illustrations

 (a)         A, intending to deceive B, falsely represents that five hundred maunds of indigo are made annually at A's factory, and thereby induces B to buy the factory. The contract is voidable at the option of B.

 (b)         A, by a misrepresentation, leads B erroneously to believe that five hundred maunds of indigo are made annually at A's factory. B examines the accounts of factory, which show that only four hundred maunds of indigo have been made. After this B buys the factory. The contract is not voidable on account of A's misrepresentation.

 (c)          A fraudulently informs B that A's estate is free from encumbrance. B thereupon buys the estate. The estate is subject to a mortgage, B may either avoid the contract, or may insist on its being carried out and the mortgage-debt redeemed.

 (d)         B, having discovered a vein of ore on the estate of A, adopts means to conceal and does conceal, the existence of the ore from A. Through A's ignorance B is enabled, to buy the estate at an under-value. The contract is voidable at the option of A.

 (e)         A is entitled to succeed to an estate at the death of B; B dies: C, having received intelligence of B's death, prevents the intelligence reaching A, and thus induces A to sell his interest in the estate. The sale is voidable at the option of A.

19-A.     Power to set aside contract by under influence. When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option *of the party whose consent was so caused.

Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the Court may seem just.

Illustrations

 (a)         A's son has forged B's name to a promissory note. B. under threat of prosecuting A's obtains a bond from A for the amount of the forged notes. If B sues on this bond, the Court may set the bond aside.

 (b)         A, moneylender, advances Rs. 100 to B, an agriculturist, and, by undue influence, induces B to execute a bond for Rs. 200 with interest at 6 per cent per month. The Court may set the bond aside, ordering B to repay Rs. 100 with such interest as may seem just.

20.          Agreement void where both parties are under mistakes as to matter of fact. When both the parties to an agreement are under a mistake as to matter of fact essential to the agreement, the agreement is void.

Explanation. An erroneous opinion as to the value of the thing which form the subject matter of the agreement is not to be deemed a mistake as to a matter of fact.

Illustrations

 (a)         A agrees to sell to B a specific cargo of goods supposed to be on its way from England to Karachi. It turns out that, before the day of the bargain, the ship conveying the cargo had been cast away and the goods lost. Neither party was aware of the facts. The agreement is void.

 (b)         A agrees to buy from B certain horse. It turns out that the horse was dead at the time of the bargain, through neither party was aware of the fact. The agreement is void.

 (c)          A, being entitled to an estate for the life of B, agrees to sell it to C, B was dead at the time of the agreement, but both parties were ignorant of the fact. The agreement is void.

21.          Effect of mistakes as to law. A contract is not voidable because it was caused by a mistake as to any law in force in Pakistan; but a mistake as to a law not in force in Pakistan has the same effect as a mistake of fact.

Illustrations

A and B make a contract grounded on the erroneous belief that a particular debt is barred by the Pakistan Laws of Limitation, contract is not voidable.

Second Illustration

 [Repealed by the Repealing and Amending Act 1917 (24 of 1917) Sec. 2 and Sch. II.]

22.          Contract caused by mistake of one party as to matter of fact. A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.

23.          What considerations and objects are lawful or what not. The consideration or object of an agreement is lawful, unless-it is forbidden by law; or is of such a nature that, permitted it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object or of an agreement is said to be unlawful, Every agreement of which the object or consideration is unlawful is void.

Illustrations

(a)          A agrees to sell his house to B for 10,000 rupees. Here B's promise to pay the sum of 10,000 rupees is the consideration for A's promise to sell the house, and A's promise to sell the house is the consideration for B's promise to pay the 10,000 rupees. These are lawful considerations.

 (b)         A promises to pay B 1,000 rupees at the end of six months, if C, who owes that sum to B, falls to pay it, B promises to grant time to C accordingly. Here the promise of each party is the consideration for the promise of the other party and these are lawful considerations.

 (c)          A promises, for a certain sum paid to him B, to make good to B the value of his ship if it is worked on a certain voyage. Here A's promise is the consideration for B's payment and B's payment is the consideration for A's promise and these are lawful considerations.

 (d)         A promise to maintain B's child and B promises to pay A 1,000 rupees yearly for the purposes. Here the promise of each party is the consideration for the promise of the other party. These are lawful considerations.

 (e)         A, B and C enter into an agreement for the division among them of gains acquired, or to be acquired, by them by fraud. The agreement is void, as its object is unlawful.

 (f)          A promises to obtain for B an employment in the public service, and B promises to pay 1,000 rupees to A. The agreement is void, as the consideration for it is unlawful.

 (g)         A, being agent for a landed proprietor, agrees for money, without the knowledge of his principal, to obtain for B a lease of land belonging to his principal. The agreement between A and B is void, as it implies a fraud by concealment by A, on his principal.

 (h)         A promises B to drop a prosecution which he has instituted against B for robbery, and B promises to restore the value of the things taken. The agreement is void, as its object is unlawful.

 (i)           As estate is sold for arrear of revenue under the provisions of an Act of the Legislature, by which the defaulter is prohibited from purchasing estate. C, upon an understanding with A, becomes the purchaser, and agrees to cover the estate to A upon receiving from him the price which B has paid. The agreement is void, as it renders the transaction, if effect, a purchase by the defaulter, and would so defeat the object of the law.

 (j)          A, who is B's mukhtar, promises to exercise his influence, as such, with B in favour of C, and C promises to pay 1,000 rupees to A. The agreement is void, because it is immoral.

 (k)         A agrees to let her daughter to hire to B for concubinage. The agreement is void, because it is immoral, though the letting may not be punishable under the Pakistan Penal Code (1860).

Void agreements

24.          Agreements void, if considerations and objects unlawful in part. If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void. A promises to superintend, on behalf of B, a legal manufacture of indigo, and an illegal traffic in other articles. B promises to pay to A a salary of 10,000 rupees a year. The agreement is void, the object of A's promise and the consideration of B's promise being in part unlawful.

25.          Agreement without consideration void, unless it in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law. An agreement made without consideration is void, unless-

 (1)         it is expressed in writing and registered under the law for the time being in force for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless

 (2)         it is a promise to compensate, wholly or in a part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do, or unless;

 (3)         it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits. In any of these cases, an agreement is a contract.

Explanation 1. Nothing in this section shall affect the validity as between the donor and donee, of any gift actually made.

Explanation 2. An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given.

Illustrations

 (a)         A promises, for no consideration, to give to B Rs. 1,000. This is a void agreement.

 (b)         A for natural love and affection, promises to give his son, B Rs. 1,000. A puts his promise to B into writing and registers it. This is a contract.

 (c)          A finds B's purse and gives it to him. B promises to give A Rs. 50. This is a contract.

 (d)         A supports B's infact son. B promises to pay A's expenses in so doing. This is a contract.

 (e)         A owes B Rs. 1,000, hut he debt is barred by the Limitation Act, A signs a written promise to pay B Rs. 500 on account of the debt. This is a contract.

 (f)          A agrees to sell a horse worth Rs. 1,000 for Rs. 10 A's consent to the agreement was freely given. The agreement is a contract notwithstanding the inadequacy of the consideration.

 (g)         A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A denies that his consent to the agreement was freely given. The inadequacy of the consideration is a fact which the Court should take into account in considering whether or not A's consent was freely given.

26.          Agreement in restraint of marriage void. Every agreement in restraint of the marriage of any person, other than minor, is void.

27.          Agreement in restraint of trade void. Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.

Exception Shaving of agreement not to carry on business of which goodwill is sold. One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person driving title to the goodwill from him, carries on a like business therein: Provided that such limits appear to the Court reasonable, regard being had to the nature of the business.

28.          Agreement in restraint of legal proceedings void. Every agreement, by which an) party thereto is restricted absolutely from enforcing his right under or in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, or which limits the time which he may thus enforce his rights is void to that extent.

Explanation 1. Saving of contract to refer to arbitration dispute that may arise. This section shall not render illegal a contract 6y which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.

Suits barred by such contracts. [When such a contract has been made, a suit may be brought for its specific performance, and if a suit, other than for such specific performance, or for the recovery of the amount so awarded, is brought by one party to such contract against any other such party in respect of any subject which they have so agreed to refer, the existence of such contract shall be a bar to the suit.

Explanation 2. Saving of contract to refer questions that have already arisen. Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration.

29.          Agreement void for uncertainty. Agreements, the meaning of which is not certain, or capable of being made certain, are void.

Illustrations

(a)          A agrees to sell to B 'a hundred tons of oil'. There is nothing whatever to show what kind of oil was intended. The agreement is void for uncertainly.

 (b)         A agrees to sell to B one hundred tons of oil of a specified description known as an article of commerce. There is no uncertainty here to make agreement void.

 (c)          A, who is a dealer in cocoanut-oil only, agrees to sell to B 'one hundred tons of oil'. The nature of A's trade affords an indication of the meaning of the words, and A has entered into a contract for the sale of one hundred tons of coconut oil.

 (d)         A agrees to sell to B 'all the grain in my granary' at Rahim Yarkhan. There is no uncertainly here to make the agreement void.

 (e)         A agrees to sell to B 'one thousand maunds of rice at a price to be fixed by C'. As the price is capable of being made certain, there is no uncertainty here to make the agreement void.

 (f)          A agrees to sell to B 'my white horse for rupees five hundred or rupees one thousand'. There is nothing to show which of the two prices was to be given. The agreement is void.

30.          Agreements by way of wager void. Agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted to any person to able the result of any game or other uncertain event on which any wager is made.

Exception in favour of certain prize for horseracing. This section shall not be deemed to render unlawful a subscription, or contribution, or agreement to subscribe or contribute, made or entered into for or toward any plate, prize or sum of money, of the value or amount of five hundred rupees or upwards, to be awarded to the winner or winners of any horse-race.

Section 294-A of the Pakistan Penal Code not affected. Nothing in this section shall be deemed to legalize any transaction connected with horseracing, to which the provisions of Section 294-A of the Pakistan Penal Code apply.

30-A.     Agreements collateral to wagering agreements. A agreements knowingly made to further or assist the entering into, effecting or carrying out, or to secure or guarantee the performance, of any agreement void under Section 30, are void.

30-B.      No suit for recovery of money, commission, etc., in respect of void agreement. No suit or other proceeding shall lie for the recovery of-

 (a)         any sum of money paid or payable in respect of any agreement void under Section 30-A, or

 (b)         any commission, brokerage, fee or reward in respect of knowingly affecting or currying out, or aiding in affecting or carrying out, of any such agreement, or of any sum of money otherwise claimed or claimable in respect thereof, or

 (c)          any sum of money knowingly paid or payable on account of any person -by way of commission, brokerage, fee, reward or other claim in respect of any such agreement.

30-C.      Payment of guardian executor, etc., in respect of void agreements not to be allowed credit. No guardian, executor, administrator heir or personal representative of any minor or deceased person, as the case may be, shall be entitled to or allowed any credit in his amount for or in respect of any payment made by him on behalf of such minor or deceased person in respect of any such agreement, or any such commission, brokerage, fee, reward or claim as is referred to in Sees. 30-A and 30-B.]

CHAPTER III

OF CONTINGENT CONTRACTS

31.          'Contingent' contract defined. A 'contingent contract' is a contract to do or not to do something, of some event, collateral to such contract, does or does not happen.

Illustration

A 'contracts to pay B, Rs. 10,000, if B's house is burnt. This is a contingent contract.

32.          Enforcement of contracts contingent is an event happening. Contingent contracts to do or not to anything if an uncertain future event happens cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become 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 d until C dies in A's lifetime

(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. uses 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.

33.          Enforcement of contracts contingent on an event not happening. Contingent contracts to do or not to do anything if an uncertain future event does not happen can be enforced when the happening of that event becomes impossible, and not before.

Illustration

A agrees to pay B a sum of money if a certain ship does not return. This ship is sunk. The contract can be enforced when the ship sinks.

34.          When event on which contract is contingent to be deemed impossible, if it is the future conduct of living person. If the future went on which a contract is contingent is the way in which a person will act at an unspecified time, the event shall be considered to become impossible when such person does anything which renders it impossible that he should so act within any definite time, or otherwise than under further contingencies.

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.

35.          When contract become void which are contingent on happening of specified event within fixed time. Contingent contracts to do or not to do anything if a specified uncertain event happens within a fixed time become void if, at expiration of the time fixed, such event has not happened, or if, before the time fixed, such event becomes impossible.

When contracts may be enforced which are contingent on specified event not happening within fixed time. Contingent contracts to do or not to do anything if a specified uncertain event does not happen within a fixed time may be enforced by law when the time fixed has expired and such event has not happened or, before the time fixed has expired, if it becomes certain that such event will not happen.

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 is burnt within the year.

36.          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.

Illustrations

(a)          A agrees to pay B 1,000 rupees if two straight lines should enclose a space. The agreement is void.

(b)          A agrees to pay B 1,000 rupees if B will marry A's daughter C. C was dead at the time of the agreement. The agreement is void.

CHAPTER IV

OF THE PERFORMANCE OF CONTRACTS WHICH MUST BE PERFORMED

37.          Obligation of parties to contracts. The parties to a contract must either perform, or offer to perform their respective promises, unless such performance is dispensed with or executed under the provisions of this Act, or of any other law. 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. 1,000. A dies before that day. A's representatives are bound to deliver the goods to B, and B is bound to pay the Rs. 1,000 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.

38.          Effect of refusal to accept after performance. Where a promisor has made an offer o performance to the promisee, and the offer has not been accepted, the promisor is not responsible for non-performance, nor does he thereby lose his rights under the contract. Every such offer must fulfill the following conditions:-

 (1)         it must be conditional;

 (2)         it must be made at a proper time and place, and under such circumstance 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 he 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 promises has the same legal consequences as an offer to all of them.

Illustration

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 a 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 may have a reasonable opportunity of satisfying himself that the thing offered is cotton of the quality contracted for, and that there are 100 bales.

39.          Effect of refusal of party to perform promise wholly. When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promises may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance.

Illustrations

 (a)         A, a singer, enters into a contract with B, the manager of a theater, to sing at his theater two nights in every week during the next two months, and B engages to pay her 100 rupees for each night's performance. On the sixth night 4 willfully absents herself from the theater. 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 theater, to sing at his theater two nights in every week during the next two months, and B engages to pay her at the rate of 100 rupees for each night. On the sixth night A willfully absents herself. With the assent of B, A signs 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.

40.          Person by whom promise is to be performed. If it appears from the nature of the case that it was the intention of the parties to any contract that any promise contained in it should be performed by the promisor himself, such promise must be performed by the promisor. In other cases, the promisor or his representatives may employ a competent person to perform it.

 

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