1.
Introduction
The
beauty of contract law is that it is very flexible. For example, contract law,
on the one hand, decides which contracts are void and which contracts are not
void, and on the other hand, it provides exceptions to this decision. Such
flexibility has been created in contract law to facilitate contracting parties
to enjoy their rights and to perform their obligations in convenient manners. Doctrine
of novation of contract and concept of contingent contract has been evolved due
to such flexibility.
2. Novation of Contract
According
to contract Act, when parties to a contract agree to substitute a new contract
for their old contract or agree to rescind or alter their old contract, the
original contract needs not be performed. Such substitution or rescission or
alteration is termed as novation of contract. Following are main essentials of
novation of contract.
i.
Extinction of old contract and Creation of new valid contract
For
novation of a contract, it is essential that old contract should be wiped out
and new valid contract should be created.
ii.
Free Consent of Parties
Novation
of a contract is possible only though free consent of parties.
iii.
Creation of new Right
For
novation of contract, it is necessary that a right under old contract should be
extinguished and a new right should be created under new contract.
iv.
Specific Liability Present in old contract
It
is essential for novation of a contract that some specific liability, which is
present in the old contract, should be included in the new contract.
3. Contingent Contract
According
to contract Act, a contingent contract means a contract, which is to do or not
to do something, if some event, which is collateral to such contract, does or
does not happen.
Illustration
“A”
makes a contract with “B” to pay B ten lakh rupees in case of demolition of B
house with in next three years. Such contract is contingent contract.
4. Enforcement or Performance of Contingent Contract
In
contract Act, following rules have been settled regarding enforcement or
performance of contingent contract.
i.
Happening of a Future uncertain event
If
contingent contract is made to do or not to do something on happening of a
future uncertain event, then such contingent contract will only be enforced or
performed on happening of such future uncertain event. However, contingent
contract cannot be enforced or performed when happening of such future
uncertain event becomes impossible.
ii.
Non-happening of an uncertain future even
If
contingent contract is made to do or not to do something on non-happening of a
future uncertain event, then such contingent contract will only be enforced or
performed when such future uncertain even will become impossible. It means that
enforceability or performance of such contingent contract depends upon the
impossibility of future uncertain event. However, such contingent contract
cannot be enforced or performed when the future uncertain event happens.
iii.
Future conduct of a living person
If
contingent contract is made on the basis of performance of future conduct of a
living person, the contingent contract can only be enforced or performed when
such future conduct is performed. However, such contingent contract cannot be enforced
or performed when performance of conduct of a living person becomes impossible.
vi.
Happening of an event within fixed time
If
contingent contract is made to do or not to do anything on happening of
specified uncertain even within a fixed time, then such contingent contract can
only be enforced or performed when such uncertain even happens within fixed
time. However, such contingent contract cannot be enforced or performed when
such uncertain event does not happen within fixed time.
v.
Non-happening of an event within a fixed time
If
contingent contract is made to do or not to do anything on non-happening of
specified uncertain event within a fixed time, then such contingent contract
can only be enforced or performed on non-happening of such uncertain event
within fixed time. However, such contingent contract cannot be enforced or
performed when such uncertain event happens within fixed time.
vi.
Impossible Event
If a
contingent contract is made to do or not to do anything on happening of an impossible
event, such contingent cannot be enforced or performed whether impossibility of
the event is known to the contracting parties or not. The reason is that such
contingent contract is void.
5.
Conclusion
To
conclude, it can be stated that doctrine of novation of contract and concept of
contingent contract have been evolved so that contracting parties can make
better adjustment of their rights and benefits under contract.
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