Page 28 - DMGT102_MERCANTILE_LAWS_I

Mercantile Laws-I

Notes the letter communicating it reaches A, but not afterwards. The communication of a revocation
(of an offer or an acceptance) is complete (i) As against the person who makes it when it is put
into a 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; (ii) As against the person to whom it is made, when it comes to
his knowledge. In the above example, A may revoke his offer by telegram. The revocation is
complete (i) As against A when the telegram is dispatched; (ii) As against B when B receives it.
B may revoke his acceptance by a telegram. B’s revocation is complete as against B, when the
telegram is dispatched, and as against A when it reaches him.
Contracts over telephone or through telex, fax/e-mail. One may enter into contracts either
(i) When he is face to face with another person or (ii) Over telephone or (iii) through telex
or (iv) through post office. When one is face to face with another person, the contract comes

into existence immediately after the negotiations are completed with the process of offer and
acceptance. Contracts over telephone are just like contracts face to face. But the offeree must
make it sure that his acceptance is received by the offeror otherwise there will be no contract, as
communication of acceptance is not complete.

2.8 Contingent Contract Defined (S. 31)

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.

Example: A contracts to pay B ` 10,000 if B’s house is burnt. This is a contingent contract.

Essential Characteristics of a Contingent Contract

1. The performance of a contingent contract depends upon happening or non-happening of
some future event.

2. The event on which the performance is made to depend, is an event collateral to the
contract, i.e. it does not form part of the reciprocal promises which constitute the contract.

Example:

(i) A agrees to deliver 100 bags of wheat and B agrees to pay the price only afterwards,
the contract is a conditional contract and not contingent, because the event on which B’s
obligation is made to depend is a part of the promise itself and not a collateral event.
(ii) A promises to pay B ` 10,000 if he marries C, it is not a contingent contract.
3. The contingent event should not be the mere will of the promisor.

Example: A promises to pay B ` 1,000, if he so chooses, it is not a contingent contract.

However, where the event is within the promisor’s will but not merely his will, it may be a
contingent contract.

Example: A promises to pay B ` 1,000, if A left Delhi for Mumbai, it is a contingent
contract, because going to Mumbai is an event within A’s will, but is not merely his will.
Rules Regarding Enforcement of Contingent Contracts (Ss. 32 to 36). The rules regarding
contingent contracts are summarised hereunder:
1. Contingent contracts to do or not to do anything if an uncertain future event happens
cannot be enforced by law unless and until that event has happened. And if the event
becomes impossible such contract becomes void (s.32).

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