Contingent contracts, also known as conditional contracts, are agreements that depend on the occurrence or non-occurrence of a future event. The enforceability of such contracts is a common area of legal inquiry, as it raises questions about the nature of contract formation and performance. In this article, we will delve into the legal landscape surrounding the enforceability of contingent contracts, exploring key principles and case law.
At the outset, it's crucial to understand that the enforceability of a contingent contract hinges on the certainty and legality of the condition. The condition must be possible to occur, and it must not be against public policy or illegal. If these prerequisites are met, the contract will typically be enforceable once the condition is fulfilled.
Certainty of the Condition
The first key aspect in determining the enforceability of a contingent contract is the certainty of the condition. The condition must be sufficiently definite and certain for the contract to be enforceable.
For instance, in the case of Stilk v Myrick (1809) 6 Taunt 12, the court held that a contract to pay extra wages to sailors for working a ship home was not enforceable because the condition (the ship's safe return) was uncertain and depended on future events.
Possible Condition
The condition must also be possible to occur. If the condition is impossible, the contract will not be enforceable. This principle is encapsulated in the maxim impossibility per se.
In Coutts v Hastie (1856) 5 H & N 673, the court held that a contract to pay a sum of money on the death of a particular person was not enforceable because the condition (the person's death) was impossible, as the person was already dead at the time the contract was made.
Legal and Non-Illegal Condition
The condition must also be legal and not against public policy. A contract with an illegal or immoral condition will not be enforced.
For example, in Pearce v Brooks (1866) LR 1 Ex 213, the court held that a contract to pay a sum of money on the occurrence of a certain illegal event was not enforceable because the condition was illegal.
Fulfillment of the Condition
Once the condition is fulfilled, the contract becomes immediately enforceable. The parties are then bound by the contract, and any remedies available for breach of contract become available.
However, if the condition fails to occur, the contract becomes void and unenforceable. This is known as condition precedent. If the condition is to be fulfilled in the future, it is known as condition subsequent.
Condition Precedent
In a contract with a condition precedent, the contract is not enforceable until the condition is fulfilled. If the condition does not occur, the contract remains unenforceable.
For instance, in Chappell & Co Ltd v Nestlé Co Ltd [1960] AC 87, the court held that a contract for the sale of chocolate bars with a prize inside was not enforceable because the condition precedent (the prize being found) had not occurred.
Condition Subsequent
In a contract with a condition subsequent, the contract is enforceable until the condition occurs. Once the condition occurs, the contract becomes void and unenforceable.
For example, in RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG [2010] UKSC 14, the court held that a contract for the supply of machinery was not enforceable after the condition subsequent (the machinery being used for a certain purpose) occurred.
In the realm of contingent contracts, it's essential to seek legal advice to ensure that your contract is enforceable. A well-drafted contract, with a clear and certain condition, can provide a solid foundation for your agreement. However, it's crucial to remember that the enforceability of a contingent contract depends on the specific facts and circumstances of each case.