Contents

01Chapter Overview 02Contingent Contract 03Collateral Event 04Essentials 05Rules of Enforcement 06Fixed Time Rules 07Contingent vs Wagering 08Quasi Contracts 09Features of Quasi Contracts 10Types of Quasi Contracts 11Finder & Mistake/Coercion 12Quasi Contract vs Contract 13Case Law Bank 14Quick Revision 15Revision Mind Map
01
FoundationChapter Overview

This unit has two separate but connected ideas. First, a contract may depend on a future uncertain event. That is a contingent contract. Second, in some cases law creates obligations even though there is no actual contract. Those are quasi-contracts.

Contingent Contract depends on a collateral uncertain event. Quasi-Contract is not a real contract, but law treats it like one to prevent unjust enrichment.
Part 1Contingent contracts.
Part 2Enforcement rules.
Part 3Contingent vs wagering.
Part 4Quasi contracts.
ICAI Learning Outcomes
  • Basic characteristics of contingent contracts and quasi-contracts.
  • Rules relating to enforcement of contingent contracts.
  • Difference between contingent and wagering contracts.
  • Five statutory quasi-contractual obligations.
Main Exam Traps
  • Confusing a conditional contract with a contingent contract.
  • Forgetting that the event must be collateral.
  • Calling a wagering agreement valid.
  • Assuming quasi-contract requires offer and acceptance.
  • Forgetting minor’s liability for necessaries is limited to property.
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Master Test For contingent contract, ask: Is the event uncertain and collateral? For quasi-contract, ask: Has one person been unjustly enriched at another’s cost?
02
Section 31Contingent Contract

A contract may be absolute or contingent. An absolute contract is one where the promisor undertakes to perform in any event. A contingent contract depends on a future uncertain collateral event.

Section 31
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.

Contracts of insurance, indemnity and guarantee fall under this broad category because the obligation is triggered by an uncertain event.

ICAI-style Examples

A contracts to pay B ₹10,00,000 if B’s house is burnt. This is a contingent contract. A contracts to buy B’s house for ₹50,00,000 if A secures a bank loan for that amount. This is also a contingent contract.

03
Core ConceptCollateral Event

The event must be collateral to the contract. It must not be the direct performance promised under the contract and must not be the whole consideration for the promise.

Pollock and Mulla
A collateral event is an event which is neither a performance directly promised as part of the contract, nor the whole of the consideration for a promise.
SituationContingent or not?Reason
A pays B if B’s house burns.Contingent.Burning of house is collateral event.
A delivers wheat and B pays price afterwards.Not contingent.Payment is part of performance, not collateral event.
A pays B ₹1,00,000 if B marries C.Not contingent in ICAI discussion.Marriage is the consideration/promise context, not collateral in the required sense.
B pays A only after A constructs swimming pool.Not contingent.Construction is directly connected with performance.
Memory hook: Collateral event is outside the main performance.
04
Section 31Essentials of Contingent Contract
Future eventPerformance depends on happening or non-happening of an event.
Collateral eventThe event is not part of performance or consideration.
Not mere willThe event should not be merely the promisor’s will.
Uncertain eventThe event must be uncertain, not certain or bound to happen.

1. Performance depends on event

The condition may be precedent or subsequent. Example: A promises to pay B ₹50,000 if it rains on the first day of next month.

2. Event must be collateral

The event must be outside the contractual performance itself. If the event is directly the promised performance, the contract is conditional, not contingent.

3. Event should not be mere will of promisor

If A promises to pay B ₹1,00,000 if A so chooses, there is no contract. But if A promises to pay B if it rains and A leaves Delhi for Mumbai, it may be contingent because rain is not merely A’s will.

4. Event must be uncertain

If event is certain or practically bound to happen, the contract is not contingent. For example, permission that is generally granted as a matter of course after formalities may not make the contract contingent.

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Exam Trap Do not treat every condition as contingency. The event must be uncertain and collateral.
05
Sections 32–36Rules Relating to Enforcement

The enforcement rules decide when contingent contracts become enforceable and when they become void.

Section 32 — Event Happening

If a contract is contingent on an uncertain future event happening, it cannot be enforced unless and until that event happens. If the event becomes impossible, the contract becomes void.

Example

A contracts to pay B when B marries C. C dies without marrying B. The contract becomes void.

Section 33 — Event Not Happening

If a contract is contingent on an uncertain future event not happening, it can be enforced only when happening of that event becomes impossible.

Example

P agrees to pay Q if a particular ship does not return. The contract is enforceable only when the ship sinks or otherwise cannot return. If the ship returns, the contract becomes void.

Section 34 — Conduct of Living Person

If a contract is contingent on how a living person will act at an unspecified time, the event is treated as impossible when that person does something that makes the required conduct impossible.

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Frost v. Knight
Conduct making event impossible

Facts The defendant promised to marry the plaintiff after the death of his father. While the father was still alive, the defendant married another woman.

Issue Had the promised event become impossible even though the father was still alive?

Held Yes. By marrying another woman, the defendant made it impossible to marry the plaintiff as promised. The plaintiff could sue for breach.

Exam Memory Line Conduct of a living person can make the contingent event impossible.
06
Sections 35–36Fixed Time and Impossible Event Rules

Section 35 — Event Happening within Fixed Time

If a contract is contingent on an uncertain event happening within a fixed time, it becomes void if the time expires without the event happening, or if the event becomes impossible before expiry.

Example

A promises to pay B if a certain ship returns within one year. It is enforceable if the ship returns within the year, and becomes void if the ship is burnt within the year or does not return within the year.

Section 35 — Event Not Happening within Fixed Time

If a contract is contingent on an event not happening within fixed time, it can be enforced when the time expires and the event has not happened, or earlier if it becomes certain that the event will not happen.

Example

A promises to pay B if a certain ship does not return within one year. It is enforceable if the ship does not return within the year, or if it is burnt within the year.

Section 36 — Impossible Event

Contingent agreements to do or not to do anything if an impossible event happens are void, whether parties knew of impossibility or not at the time of agreement.

Examples

A agrees to pay B ₹1,00,000 if the sun rises in the west next morning. Void. X agrees to pay Y ₹1,00,000 if two straight lines enclose a space. Void.

Contingent uponWhen enforceableWhen void
Happening of eventWhen event happens.When event becomes impossible.
Non-happening of eventWhen happening becomes impossible.When event happens.
Behaviour of personWhen person acts in specified manner.When person makes such conduct impossible.
Happening within fixed timeWhen event happens within time.When time expires without event, or event becomes impossible before expiry.
Non-happening within fixed timeWhen time expires without event, or event becomes impossible before expiry.When event happens within time.
Impossible eventNever enforceable.Void from beginning.
07
Important DistinctionContingent Contract vs Wagering Contract
BasisContingent ContractWagering Contract
MeaningContract to do or not do something based on collateral event happening/not happening.Promise to give money or money’s worth based on uncertain event happening/not happening.
Reciprocal promisesMay not contain reciprocal promises.Consists of reciprocal promises.
Uncertain eventEvent is collateral.Uncertain event is the core factor.
NatureMay not be wagering.Essentially contingent in nature.
Interest in subject matterParties have real interest in subject matter.Parties have no real interest except winning or losing.
Mutuality of gain/lossNot based only on gain and loss.Game of winning and losing alone.
Legal effectValid.Void.
Memory hook: Insurance has interest; wager has only win or lose.
08
Sections 68–72Quasi Contracts

In a true contract, there is offer, acceptance, consent and agreement. In a quasi-contract, these are absent. Still, law imposes obligation because it would be unfair to let one person benefit at another person’s expense.

Quasi Contract
A quasi-contract is a relation resembling a contract where law creates obligations even though parties have not entered into a contract in the real sense.

Quasi-contracts are based on equity, justice and good conscience. The core idea is: No person should unjustly enrich himself out of another person’s loss.

ICAI-style Examples

A tradesman leaves goods at C’s house by mistake. C treats the goods as his own. C must pay. A pays money to B by mistake though it was due to C. B must refund. A fruit parcel is wrongly delivered to R, who consumes it thinking it is a birthday present. R must pay or restore.

09
Core FeaturesFeatures of Quasi Contracts
Right to moneyGenerally a right to money, often liquidated amount.
Imposed by lawDoes not arise from agreement of parties.
Against specific personAvailable against particular person(s), not against the whole world.
Duty, not promiseBasis is legal duty, not voluntary promise.
★
Exam Point A quasi-contract is not created by consent. It is imposed by law to prevent unjust enrichment.
10
Sections 68–70Types of Quasi Contracts — Part 1

Section 68 — Necessaries Supplied to Incapable Person

If a person incapable of contracting, or anyone whom he is legally bound to support, is supplied necessaries suited to his condition in life, the supplier is entitled to be reimbursed from the property of such incapable person.

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Minor Point The incapable person is not personally liable. Reimbursement is from his property.
ICAI-style Example

A supplies B, a minor or lunatic, with necessaries suitable to B’s condition in life. A is entitled to be reimbursed from B’s property.

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Minor’s College Fees and Books
Section 68

Facts X, a minor studying M.Com., took ₹1,00,000 from B for college fees and books. X owned assets worth ₹9 lakh but failed to repay.

Issue Can B recover from X despite X being a minor?

Held Yes, but only from X’s property. Education-related fees and books may be necessaries suited to X’s condition in life.

Exam Memory Line Necessaries supplied to minor → recover from minor’s property, not personal liability.

Section 69 — Payment by Interested Person

A person interested in payment of money which another is bound by law to pay, and who pays it, is entitled to be reimbursed by the other.

ICAI-style Example

B holds land on lease from A, the zamindar. A’s government revenue is in arrears and land is advertised for sale. Sale would cancel B’s lease. B pays the revenue to protect his lease. A must reimburse B.

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Carriage Seized for Tenant’s Rent
Section 69

Facts P left his carriage on D’s premises. D’s landlord seized the carriage for rent due from D. P paid the rent to get his carriage released.

Issue Can P recover the rent amount from D?

Held Yes. D was legally bound to pay rent, and P was interested in making payment to protect his carriage.

Exam Memory Line Interested payment of another’s legal liability → reimbursement.

Section 70 — Benefit of Non-Gratuitous Act

Where a person lawfully does something for another, or delivers something to him, not intending to act gratuitously, and the other person enjoys the benefit, he must compensate or restore.

Lawful actPlaintiff lawfully did something or delivered something.
Not gratuitousHe did not intend it to be free.
Benefit enjoyedOther party accepted or enjoyed benefit.
ICAI-style Examples

A tradesman leaves goods at B’s house by mistake. B treats them as his own. B must pay. A food delivery is wrongly delivered to Ishaan; he eats it. He must pay because he enjoyed a non-gratuitous benefit.

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Shyam Lal v. State of U.P.
Section 70 — benefit of service

Facts A government servant was compulsorily retired. He obtained an injunction, was reinstated and paid salary, but was given no work. Later the appeal was decided in favour of the government.

Issue Could the salary paid during reinstatement be recovered?

Held He was directed to return the salary paid during that period because the benefit/payment could not be retained in the circumstances.

Exam Memory Line Benefit enjoyed without final legal basis may require restoration.
11
Sections 71–72Finder of Goods and Money Paid by Mistake/Coercion

Section 71 — Responsibility of Finder of Goods

A person who finds goods belonging to another and takes them into custody is subject to the same responsibility as a bailee.

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Hollins v. Howler
Finder’s right against everyone except true owner

Facts H found a diamond on the floor of F’s shop and handed it to F to keep till the owner was found. The true owner could not be traced. H later offered lawful expenses and asked for the diamond back. F refused.

Issue Who had the better right to the diamond: H the finder or F the shopkeeper?

Held F had to return the diamond to H. The finder has a right to retain goods against everyone except the true owner.

Exam Memory Line Finder is not owner, but has better right than everyone except true owner.
ICAI-style Example

A customer leaves a brooch in a shop. The shop assistant keeps it in a drawer. It is later missing. Shopkeeper is liable if ordinary care was not taken.

Section 72 — Money Paid by Mistake or Under Coercion

A person to whom money has been paid, or anything delivered, by mistake or under coercion must repay or return it.

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Shivprasad v. Sirish Chandra
Payment by mistake

Facts Money or goods were transferred under mistake. The question was whether such payment or delivery could be recovered.

Issue Are payments made under mistake recoverable?

Held Yes. Every kind of payment of money or delivery of goods under mistake is recoverable.

Exam Memory Line Mistaken payment must be refunded.
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Sales Tax Officer v. Kanhaiyalal
Mistaken tax payment

Facts Money was paid as tax under a mistaken belief or misunderstanding of legal liability.

Issue Can mistaken tax payment be recovered?

Held Yes. The Supreme Court affirmed that such mistaken payment is recoverable under Section 72.

Exam Memory Line Tax paid by mistake can be recovered.
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Seth Khanjelek v. National Bank of India
Coercion under Section 72

Facts Money was paid under pressure, oppression or compulsion.

Issue Is coercion under Section 72 limited only to coercion under Section 15?

Held No. For Section 72, coercion is interpreted broadly to include oppression, extortion and similar pressure.

Exam Memory Line Section 72 coercion is wider than Section 15 coercion.
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Trikamdas v. Bombay Municipal Corporation
Recovery of penalty paid under pressure

Facts T travelled without ticket in a tram car. On checking, he was asked to pay ₹5 as penalty to compound the transaction. He later sued for recovery, claiming it was extorted from him.

Issue Was the amount recoverable?

Held The suit was decreed in T’s favour.

Exam Memory Line Money obtained through coercive pressure may be recoverable.
12
DistinctionQuasi Contract vs Contract
BasisQuasi-ContractContract
Essentials of valid contractAbsent.Present.
Source of obligationImposed by law.Created by consent of parties.
BasisUnjust enrichment and legal duty.Agreement and promise.
ConsentNo real consent required.Free consent is required.
Nature of rightGenerally right to money against specific person.Contractual rights as agreed by parties.
13
CompactCase Law / Illustration Bank
Case / IllustrationTopicPrinciple
Frost v. KnightSection 34Conduct of living person can make contingent event impossible.
Shyam Lal v. State of U.P.Section 70Benefit/payment retained without final legal basis may require restoration.
Hollins v. HowlerSection 71Finder has right against everyone except true owner.
Shivprasad v. Sirish ChandraSection 72Money paid or goods delivered under mistake are recoverable.
Sales Tax Officer v. KanhaiyalalSection 72Mistaken tax payment is recoverable.
Seth Khanjelek v. National Bank of IndiaSection 72Coercion under Section 72 includes oppression/extortion-like pressure.
Trikamdas v. Bombay Municipal CorporationSection 72Money paid under coercive pressure may be recovered.
Minor college fees exampleSection 68Necessaries supplied to minor recoverable from minor’s property.
Carriage seized for rentSection 69Interested person paying another’s legal liability can recover.
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Exam FocusQuick Revision

One-Line Revision

  • Section 31: Contingent contract depends on collateral uncertain event.
  • Collateral Event: Not part of performance and not consideration.
  • Section 32: Event happening — enforce only when event happens.
  • Section 33: Event not happening — enforce when happening becomes impossible.
  • Section 34: Conduct of living person may make event impossible.
  • Section 35: Fixed-time rules for happening and non-happening.
  • Section 36: Impossible-event agreements are void.
  • Wagering Agreement: Void; parties have no interest except win/loss.
  • Quasi-Contract: Obligation imposed by law without real contract.
  • Section 68: Necessaries supplied to incapable person recoverable from property.
  • Section 69: Interested payment of another’s legal liability is reimbursable.
  • Section 70: Non-gratuitous benefit must be compensated.
  • Section 71: Finder of goods has responsibility of bailee.
  • Section 72: Money paid or goods delivered by mistake/coercion must be returned.

High-Frequency ICAI Traps

  • Contingent event must be uncertain and collateral.
  • Mere will of promisor is not enough.
  • Insurance is contingent, not wagering, because insured has interest.
  • Wagering agreements are void.
  • Quasi-contract is not based on consent.
  • Necessaries supplied to minor do not create personal liability.
  • Finder of goods is like bailee, not owner.
  • Section 72 covers both mistake and coercion.
15
RevisionMind Map
Revision Mind Map

Contingent and Quasi Contracts — One Page Recall

Contingent contract is real contract dependent on uncertain collateral event. Quasi-contract is not real contract but law-created obligation.
1. Contingent Contract
  • Section 31.
  • Contract to do or not to do something.
  • Depends on event happening or not happening.
  • Event must be collateral.
  • Examples: insurance, indemnity, guarantee.
2. Essentials
  • Future event or condition.
  • Happening or non-happening.
  • Collateral to contract.
  • Not mere will of promisor.
  • Event must be uncertain.
Core Memory: Contingent = uncertain + collateral. Wager = uncertain + no real interest. Quasi = no agreement + law-imposed duty.
3. Enforcement Rules
  • Event happening → enforce when event happens; void if impossible.
  • Event not happening → enforce when happening becomes impossible; void if event happens.
  • Conduct of living person → impossible when person prevents required conduct.
  • Happening within fixed time → enforce if happens within time; void if not or if impossible.
  • Non-happening within fixed time → enforce if time expires without event or event becomes impossible.
  • Impossible event → void from beginning.
4. Contingent vs Wagering
  • Contingent contract is valid.
  • Wagering agreement is void.
  • Contingent has real interest.
  • Wager has only win/loss interest.
  • In contingent contract event is collateral.
5. Quasi Contracts
  • Relations resembling contracts.
  • No offer or acceptance.
  • No real agreement.
  • Obligation imposed by law.
  • Based on unjust enrichment.
6. Five Quasi-Contract Cases
  • Section 68 — necessaries supplied to incapable person.
  • Section 69 — payment by interested person.
  • Section 70 — benefit of non-gratuitous act.
  • Section 71 — finder of goods.
  • Section 72 — money paid or goods delivered by mistake/coercion.
7. Case Law Recall
  • Frost v. Knight — conduct can make event impossible.
  • Shyam Lal v. State of U.P. — Section 70 benefit/restoration.
  • Hollins v. Howler — finder’s right against all except true owner.
  • Shivprasad v. Sirish Chandra — mistaken payment recoverable.
  • Sales Tax Officer v. Kanhaiyalal — mistaken tax payment recoverable.
  • Seth Khanjelek v. National Bank of India — wider meaning of coercion under Section 72.
  • Trikamdas v. Bombay Municipal Corporation — coercive payment recovery.
Last-Minute Recall: For contingent contracts, test the event. For quasi-contracts, test unjust enrichment and the relevant section.