"Contingent contract" defined

Related judgements & precedents

These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.

1. H. P. A. International vs Bhagwandas Fatechand Daswani

   Supreme Court of India 13 Jul 2004 Binding (Supreme Court)

   Court's Decision & Legal Precedent

   A contract for sale of property which is contingent on obtaining court sanction for transfer of interests of non-parties (reversioners) is an integrated, indivisible, and inseparable contract. When the essential contingency (court sanction) fails to materialize despite reasonable efforts by the vendor and despite the vendor's implied obligation to seek it within reasonable time, the contract becomes unenforceable. A buyer cannot invoke Section 12(3) of the Specific Relief Act to enforce partial relief (transfer of life interest alone) when: (a) the contract terms evince clear intention that parties contemplated all-or-nothing transaction; (b) explicit contractual clause (Clause 6) provides for cancellation if sanction not obtained; (c) no stipulation in contract provides for separate transfer of life interest if sanction for reversioners' interests fails; (d) the claim for partial relief is made after unreasonable delay and substantial change of circumstances; (e) reversioners, being non-parties to the contract, cannot be bound by doctrines of estoppel or trusts to give effect to a contract to which they never agreed; and (f) doing so would adversely affect the reversioners' independent interests and create future litigation. Courts cannot grant specific performance on terms not contemplated by the original contract parties, even if buyer attempts to waive the sanctioning clause.

   On this section: A contingent contract is one conditional on the happening of an uncertain future event. Cited to establish that the sale agreement was contingent on court sanction.

   Read the full order on eCourts India

2. J. P. Builders vs A. Ramadas Rao

   Supreme Court of India 22 Nov 2010 Binding (Supreme Court) Reportable

   Court's Decision & Legal Precedent

   In a suit for specific performance of a property sale agreement, the plaintiff must establish continuous readiness and willingness to perform his obligations from the date of contract to the date of decree through conduct, part-payment, and financial capacity. Readiness refers to financial capacity while willingness refers to conduct of the plaintiff. When a contract involves obtaining clearance from a third party (such as a bank) for release of mortgaged property, such obtaining of clearance is an incidental and implied covenant on the vendor's part and does not make the contract contingent or impossible to perform. The equitable doctrine of marshalling under Section 56 of the Transfer of Property Act, 1882 is available to a decree holder in a suit for specific performance to ensure that the mortgagee exhausts its remedy from other properties of the mortgagor before proceeding against the property sold to the subsequent purchaser, provided such application does not prejudice the mortgagee's rights. A pure question of law can be raised for the first time at the appellate stage even if not specifically pleaded at trial, particularly when larger relief was prayed in the plaint.

   On this section: Defines contingent contracts as contracts dependent on uncertain future events; Section 32 provides that contingent contracts cannot be enforced unless event happens or becomes impossible making contract void; Court held that obtaining bank clearance is not impossible event

   Read the full order on eCourts India

The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.