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project related to contingent contracts
Typology: Study Guides, Projects, Research
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SPECIAL PROJECT SUBMITTED TO Mr. Vishal Dixit (Faculty: Law of Contracts)
SPECIAL PROJECT SUBMITTED BY SHOBHITH GURVEKAR ROLL NO. 154 BATCH: XIV SECTION C FOR SEMESTER I
At the outset, I would like to express my heartfelt gratitude and thank my teacher, Mr. Vishal Dixit for putting his trust in me and giving me a project topic such as this and for having the faith in me to deliver. Sir, thank you for an opportunity to help me grow.
My gratitude also goes out to the staff and administration of HNLU for the infrastructure in the form of our library that was a source of great help for the completion of this project.
Definition of Contingent Contract:- Section 31 of the Contract Act 1872 says –
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.
Illustration: - „A‟ contracts to pay „B‟ taka 10,000 if B‟s house is burnt. This is a contingent contract.
Elements of Contingent Contract : - the constituent elements of a Contingent Contract are mentioned here in the following way:
(i) It is a contract (ii) It may be positive or negative, i.e to do or not to do something. (iii) It is dependent on the future event and this event – (a) Is a future uncertain event, which may or may not happen. (b) The event must be collateral to such contract. Thus a mere conditional contract will not be treated as contingent.
Definition of Insurance: - Insurance may be defined as a cooperative device to spread the loss caused by a particular risk over a number of persons who are exposed to it and who agree to insure themselves against that risk. This means that insurance provides a pool to which the many contribute a certain sum of money called the premium, and out of which the few who suffer losses are compensated by the insurer. In this the offeror is also known as INSURER and the offeree is also known as POLICY HOLDER.
For Example: - In case of Marine Insurance if the total likely loss of ships on voyage on a particular route is estimated to be two ships per year, valued at rupees two corers, and the total number of ships expected to be voyage per year is calculated to be say 1,000 thousand ships than the premium for each ship may be fixed at 2, 00, 00,000/1,000 = Rs. 20,000 + say, Rs. 2,000 for other expenses and profit.
How a Insurance is said as Contingent Contract:- As we firstly knows that 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. Besides in Insurance it is also said to the same. In the Insurance the Offering parties or the Insurance Company says that they will take the liabilities of the Offeree against paid a certain amount of money by the offeree which is known as premium. So it is similar that Insurance is a contract to do something if the future event happens that will be contracted by the parties and liability will be taken by the offeror. In all the Insurance like Life Insurance, Marine Insurance, Fire Insurance, Crops Insurance and other Insurances the Offeror promises to take the risk of the offeree ageist the incident to do or not to do something and for that the offeree agrees to paid a certain amount of money.
Contract of insurance is contingent contract proving:-
Enforcement of Contingent Contract on an event happening:- According to section 32 of the Contract Act says that:
“Contingent contract 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. If the event becomes impossible such contract becomes void”
(^) Small premium: As regards the insurer, he can undertake the risk for a small premium because all the ships going out to sea are not lost. The insurer knows that he will not have to pay all ship-owners who insure their ships. There are statistical methods of calculating how many ships are likely to be lost. The insurer fixes the amount of premium on the basis of these calculations. Therefore in the long run he makes a profit on the risks that he undertakes. So the full procedures go to the contingent contract like the parties conversation.
Characteristics of Insurance law which is Contingent Contract:-
(^) Essential requirements : A contract of insurance must fulfill all the essential requirements of a contract as laid down in the law of contract. This there must be a proposal and acceptance, the parties must be capable of contracting, the object must not be illegal or immoral etc. A contract of Insurance is formed as soon as the insurer accepts the premium or in any other way shows that the proposal to insure has been accepted. This is also falls in the contingency.
Good Faith : “A contract of insurance is a contract uberrima fiedi (one based on good faith). It is the duty of the insured person to disclose all material facts concerning the subject matter of the insurance. The disclosure must be full and fair. If a material fact is not disclosed, or if there is misrepresentation or fraud, the insurer can avoid the contract.”^2 In the contract both of the parties should in good faith, and in this contingent contract which is related to Insurance the offeror takes the liability of the offeree with good faith.
(^) Indemnity :- Life insurance is a Contingent Contract. The money is payable on the happening of a contingency the date of which is uncertain.
(^4 2) Prof. Sakti Mukherjee (Commercial Law Including commercial law and Industrial Law) Page:- 412.
Other forms of insurance are contracts of indemnity. The insurer in these cases promises to indemnify the insured person against the consequence of fire, accident or some mischance and misfortune. The contract of insurance contained in a marine or fire policy is a contract of indemnity and of indemnity only, and that this contract means that the assured, in case of a loss against which the policy has been made, shall
be fully indemnified but shall never be more than fully indemnified.
(^) Insurable Interest :- in every contract of insurance the policy – older must possess an insurable interest. Insurable interest means some proprietary or interest. If there is no insurable interest there can be no insurance. And based on this insurable interest this
Insurance Law is said as Contingent Contract.
(^) Commencement of Risk :- The risk of insurer commences after the contract of insurance is entered into after the proposal to insurer is accepted.
(^) Payment of Premium :- Based on this premium both of the parties agrees with the contract for benefit of one by another. This is a relation of Contingency.
(^) The principle of Subrogation :- “In marine and fire insurance contract after the policy – holder is indemnified in full, the insurer becomes entitled to the remnant of the property insured and all rights and claims which the policy – holder may have against third parties. The insurer is subrogated to the position of the insured.”
From this view we can say that Wagering Contract is also relating with Contingent Contract. Because in wagering contract the parties bed with a future uncertain things and by that if happens only then the another party who takes liability, pays the wager money. If not happen then no question will arise. Here only one party is benefited always. From the view we can say that all Wager are contingent contract but all Contingent Contract are not wager.
Conclusion
Basing on the presence or absence of Conditions, Contracts can be classified into two groups
namely; Absolute Contracts and Contingent Contracts. In case where there is no condition, it is
called Absolute Contract. As there is no condition, absolute contract is to be performed under all
circumstances. In case where there is condition, then such contract is called Contingent Contract.
Therefore Contingent Contract means Conditional Contract. When imposed and condition is
fulfilled, the Contingent Contract becomes valid and then parties have to perform their
obligations. If imposed and Condition is not fulfilled, the Contingent Contract become Void and
then it need not be performed. So Contingent Contract is to be performed under some
circumstances only.
