Contingent Contract With Example In Hillsborough
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In a contingency contract, the task defines exactly what behavior a person must engage in to access the reward. It should include what needs to be done, who must do it, when it must be done and details with how it must be done. It should be very clear and specific for all parties.
The main difference between the two lies in their enforceability. Contingent contracts are enforceable by law if the event actually occurs. Wagering agreements, on the other hand, are void and not enforceable in a court of law from the very outset, regardless of the results.
Example of a Contingency Contract One straightforward example might be a child who agrees with their parent that if they get an A in a particular class, they will get a new bicycle. Of course, the contract may be verbal, and it may be between family members.
Wagering contracts lack any element of good faith, relying solely on the chance of a specific event happening. Insurance contracts, however, are based on the principle of utmost good faith (uberrimae fidei), requiring full disclosure of all material facts by the insured.
In the case of conditional contracts, conditions that need to be fulfilled are certain, i.e., bound to happen, which is not the case with contingent contracts, as such conditions may or may not happen.
A contingent contract can also be viewed as protection against a future change of plans. Contingent contracts can also lead to effective agreement when each party has different time preferences. For example, one party may desire immediate payoffs, while the other party may be interested in more long-term payoffs.
What are the essential components of a contingent contract? The performance of the contract is based on conditions. The conditions must be collateral in nature. Based on the occurrence or non-occurrence of an event.
There must be a valid contract to do or not to do something. The performance of the contract must be conditional. The said event must be collateral to such contracts and the event should not be at the discretion of the promisor. These are some rules that have to be followed for a contingent contract to be enforceable.
Parts of a Contingency Contract A contingency contract has three major parts: the task, the reward and the task record.
India Code: Section Details. Contingent contracts to do or not to do anything if an uncertain future event happens cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void.
