What is contingent contract?

A contingent contract is defined under Section 31 of the Contract Act, 2074 as an agreement to do or not to do something if an uncertain future event happens or fails to happen. It is a conditional contract where the performance of the contract depends on the occurrence or non-occurrence of a future event.

Key Features:

• Uncertain Event: The event must be uncertain and not under the control of the parties.
• Lawful and Possible: The event must be lawful and possible.
• No Obligation Until Event Occurs: No party is bound to perform until the event occurs or fails to occur.

Example:

If A agrees to sell his house to B only if A gets a job in Kathmandu, this is a contingent contract. The performance depends on the uncertain future event of A getting a job.

Legal Validity:

• The contract is valid if the event is lawful and possible.
• If the event becomes impossible, the contract becomes void.
• If the event is under the control of the parties, it may be considered a wagering agreement and thus void.