•  Meaning of Contingent Contract

 The word 'Contingent' means uncertain and conditional event. It means there is no certainty about something which may or may not happen. Thus, it is a contract, the performance of which is dependent upon, the happening or non happening of an uncertain event. The contingent contract contains a conditional promise. It is different from absolute contract that one in which the promise has to be performed independently or without any condition.

Contract of insurance, guarantee and indemnity are examples of contingent contract. In simple words, the performance of a contingent contract becomes due only upon happening of some future uncertain event. It is a conditional contract.

According to Black's Law Dictionary; Contingent contract means a contract part of performance of which at least is dependent on the happening of a contingence.

Section 31 of the Indian Contract Act, defines a contingent contract as; 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' promises to give a loan of Rs. 1000 to 'B', if he elected the president of particular association.

In Nepalese context, it is new concept and the Nepal Contract Act is silent on this regard. But section 12(1) makes clarity that; in case a contract has been concluded to performing or not to perform any work if any event happens in the future, the contract shall not create any liability until such event happens.

 The performance of contingent contract always depends on the future uncertain event. The promise is conditional. The performance is entirely related with such events, which must or must not happen on the basis of terms of contract. In this sense, the contract in which obligations and rights arise only after the happening or non happening of an uncertain event at a future time is known as a contingent contract. e.g. A concluded a contract with B to pay Rs. 10 lakhs if B's factory is brunt. This is the contingent contract.

 Features of a Contingent Contract

  •  There must be a contract to do or not to do something.
  • The performance of contract must depend upon the happening or non happening of a future uncertain event. 
  • The event must be possible but uncertain.
  • The event must be collateral to the subject matter of a contract.
  • The event not depending on the will of the promisor.
  • The contingent contract regards possible events it never regards impossible events.

 Rules Regarding to Contingent Contract

 Rules regarding performance of Contingent contract are mentioned in section 32-36 of the Indian Contract Act and Section 12 of Nepal Contract Act, 2056. These are given below:-

1. On the happening of an uncertain future event:

Contingent contract depends on the happening of an uncertain future event. It can not be enforced until the event has happened. If the event becomes impossible, such contract becomes void. e.g. 'A' concludes a contract to pay 'B' a sum of money when 'B' married to 'C'. If 'B' married with 'C' 'A' liable to pay a sum of money to 'B'. This is a contingent contract but If 'C' dies without married with B. Such contract becomes void.

2. On the non-happening of an uncertain future event:

The contract can be enforced when the happening of an event becomes impossible to happen, the contingent contract dependent on non- happening of an uncertain future event can be enforced by law only after the happening impossible. e.g., A agrees to sell his bicycle to B If C dies. The Contract can not be enforced so long as C is alive.

3. Happening of an uncertain event within specified time:

A contingent contract can be enforced with a specified event happening within a fixed time. In other words, there is happening an uncertain event before the expiry of that prescribed time the contract becomes valid.

e.g., 'A' promises to pay B Rs. 10 lakhs if a certain ship returns with in a year. The contract may be enforced if the ship returns within a year and contract becomes void if the ship is burnt with in the year.

4. On a specific event not happening with in a fixed time:

A contract to do or not to do any thing if specified uncertain event does not happen with in a fixed time. Such event must be happen or it must become certain that such event will not happen before the prescribed time e.g., 'A' promise to pay 'B' a sum of money (as insurance claim) if a certain ship does not return with in a year. The contract may be enforced if the ship does not return within the year.

5. Event must not be impossible:

If Contingency in an agreement is an impossible event, the agreement is void. A contingent contract considers only uncertain event but not the impossible event. e.g., 'A' agreed to pay 'B' Rs. 1000/- if two straight lien should enclose a space the agreement is void.


  • Wagering Agreement:

A 'wager' is a bet. A wager also is the nature of an agreement, on which a party is to pay a certain sum of money on the happening of a special uncertain event. It is a game of chance. The chance of either party winning or losing is depended on an uncertain event. It is not valid due to illegality or unlawfulness.

Differences between Contingent Contract and Wagering

Contingent Contract


1.    Contingent Contract is valid in the eyes of law.

1.    Wagering agreement is not valid in the eyes of law

2.    Contingent Contract is enforceable by law.

2.    Wagering agreement is void ab intio.

3.    Contingent Contract is not against public welfare.

3.    Wagering agreement is against public welfare.

4.    Both parties have consideration.

4.    Both parties have loss or gain each other.

5.    Performance is obligatory.

5.    Performance is not obligatory.

6.    Future event is only collateral to create liability of the parties.

6.    Future event is sole determining factor in wagering.

7.    There is no matter of gain or loss.

7.    Main aim is loss to one and gain to other in wagering.

8. In Contingent contract the parties have real interest on the occurrence or non-occurrence of the event.

8. The parties are not interested in the occurrence of event except for the winning or losing the amount.