Indian Contract Act 1872 / Section 32

Section 32 of Indian Contract Act 1872: Enforcement of Contracts Contingent on an Event Happening

Section 32 of the Indian Contract Act, 1872 deals with a contingent contract that depends on an uncertain future event happening. Such a contract cannot be enforced unless and until the specified uncertain event happens. If that event becomes impossible, the contingent contract becomes void.

Section 32 at a glance
  • The contract depends on an uncertain future event.
  • Enforcement is postponed until that event happens.
  • If the event becomes impossible, the contract becomes void.
  • The provision forms part of Chapter III of the Indian Contract Act dealing with contingent contracts.

Meaning of a contingent contract

Section 31 defines a contingent contract as a contract to do or not to do something if an event, collateral to the contract, does or does not happen. Section 32 then states the rule for enforcement where the contract is contingent on that uncertain future event happening.

Text and effect of Section 32

Section 32 - Enforcement of contracts contingent on an event happening

In substance, the section provides that a contingent contract dependent on an uncertain future event happening cannot be enforced unless and until that event happens. If the event becomes impossible, the contract becomes void.

The legal effect is therefore conditional. The parties may have entered into a valid contract, but the obligation made dependent on the contingency does not become enforceable until the agreed event occurs. Where occurrence of that event becomes impossible, the basis of the contingent obligation disappears and the contract becomes void under Section 32.

Essential requirements of Section 32

1. There must be a contingent contract

The obligation must depend on an uncertain event that is collateral to the contract. A promise that is absolute and unconditional does not become a Section 32 contingent contract merely because performance may later become difficult.

2. The future event must happen before enforcement

Where the contract is expressly dependent on the happening of the specified event, a party cannot enforce the contingent promise before that event occurs.

3. Impossibility of the event makes the contract void

If the contemplated event becomes impossible, the contract dependent upon its happening becomes void. It is then unnecessary to wait indefinitely for an event that can no longer occur.

Statutory illustrations

  1. A contracts with B to buy B's horse if A survives C. The contract cannot be enforced unless and until C dies during A's lifetime.
  2. A contracts with B to sell a horse to B at a specified price if C, to whom the horse has been offered, refuses to buy it. The contract cannot be enforced unless and until C refuses to buy the horse.
  3. A contracts to pay B a sum of money when B marries C. C dies without marrying B. The event has become impossible and the contract becomes void.

Section 32 and force majeure clauses

A contractual force majeure clause may operate as a contingent term where the parties have themselves provided what is to happen on the occurrence of specified events. The Supreme Court has explained that where an express or implied force majeure clause governs the event, the matter is dealt with under Section 32; Section 56, which concerns impossibility or frustration outside such a contractual allocation, operates differently.

Practical point: Whether Section 32 applies depends on the wording and structure of the particular contract. The contractual clause should therefore be read first to identify the specified event, its consequences, notice requirements, exclusions, and any agreed allocation of risk.

Section 32 compared with Section 56

Section 32 concerns a contract whose operation is made contingent by the parties on an uncertain event. Section 56 addresses, among other matters, a contract that becomes impossible or unlawful after it is made. The distinction is important in force majeure disputes because a contract containing an applicable clause is ordinarily interpreted according to that clause and the rules governing contingent contracts.

Related provisions

Sections 31 to 36 form Chapter III of the Indian Contract Act, 1872. Section 31 defines a contingent contract; Sections 32 and 33 address contingencies based respectively on an event happening or not happening; Sections 34 and 35 contain further rules for determining contingencies; and Section 36 declares agreements contingent on impossible events void.

This page provides general legal information. Application of Section 32 depends on the terms of the contract and the facts of the particular case.