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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. Thus it is a contract, the performance of which is dependent upon, the
happening or non-happening of an uncertain event, collateral to such contract.
Example:
A contracts to indemnify B up to Rs 20,000, in consideration of B paying Rs 1,000 annual premium, if Bs
factory is burnt. This is a contingent contract.
Any ordinary contract can be changed into a contingent contract, if its performance is made dependent
upon the happening or non-happening of an uncertain event, collateral to such contract. For example, the
following are contingent contracts:
(a) A contracts to sell B 10 bales of cotton for Rs 20,000, if the ship by which they are coming returns
safely.
(b) A promises to give a loan of Rs 1,000 to B, if he is elected the president of a particular association.
(c) A promises to pay Rs 50,000 to B if a certain ship does not return, of course after charging usual
premium. (It is a contract of insurance.)
(d) C advances a loan of Rs 10,000 to D and M promises to C that if D does not repay the loan, M will do
so. (It is a contract of guarantee.)

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