Section 31 Contract Act: 'Contingent contract' defined

Section 31 of Indian Contract Act: 'Contingent contract' defined

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

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.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Contract Sec 2(h)

Legal Commentary & Landmark Judgments: Section 31

A contingent contract conditions promissory enforceability upon the occurrence or non-occurrence of an uncertain future event collateral to the transaction's core obligations. In commercial transactions, this statutory mechanism underpins conditions precedent (CPs), corporate acquisition milestones, indemnity policies, and performance bank guarantees, distinguishing executory promises from conditional covenants that remain inchoate until the collateral event materializes.

Contingent Contract Definition: Section 31 defines a contingent contract as a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.
Enforceability Conditions: Until the collateral condition precedent occurs, the contract remains inchoate and neither party can demand performance, but once the condition is fulfilled, the obligations become absolute.

Key Landmark Precedents:

Chandnee Widya Vati Madden v. C.L. Katial (AIR 1964 SC 978): The Supreme Court held that a contract for sale of land subject to obtaining government sanction is a contingent contract. The seller was legally bound to make an application for sanction, and could not plead contingency to evade specific performance.
Citadel Fine Carlets v. Ram Nal & Co. (2011) 9 SCC 147: The Supreme Court affirmed that where contract performance depends upon an event collateral to the contract, rights under the contract remain suspended until that collateral event occurs.

Legal Commentary:

In commercial M&A and real estate agreements, conditions precedent (CPs)—such as CCI approval, environmental clearance, or shareholder assent—constitute Section 31 collateral contingencies. Promisors are under an implied obligation of good faith to take all necessary steps to fulfill the contingency rather than purposefully triggering failure.

Section 31: 'Contingent contract' defined

Section 31 of Indian Contract Act: 'Contingent contract' defined

Legal Commentary & Landmark Judgments: Section 31