Report of Business Law

A contract may be unconditional or absolute on the one hand and conditional or contingent

on the other. The absolute or unconditional contract is one without any reservations or

conditions and is to be performed under any event. On the other hand, conditional or

contingent contract is one in which a promise is conditional and the contract shall be

performed only on the happening or not happening of some future uncertain event. The

event must be collateral to the contract. The condition may be precedent or subsequent.

A collateral event is defined as one which is neither a performance directly promised as part

of the contract, nor the whole of the consideration for a promise. The event, therefore

independent of the contract and does not form part of consideration to it.

The performance of such a contract depends on contingency and such contingency is

uncertain. The test of determining whether the contract is contingent or not, is uncertainty.

If contingency is certain it is not a contingent contract.

Essential characteristics of a Contingent Contract:

a) There should be existence of acontingency; happening or non-happening of some event

in future.

b) Contingency must be uncertain.

c) The event must be collateral, for example incidental to the contact.

Rules Regarding Contingent Contracts:

Enforcements