A contingent interest is inalienable. On the other hand, vested interest is heritable and transferable
In the case of a transfer of property, a person may acquire a contingent interest as against a real interest or vested interest in the property. The relevant provisions are contained under Section 21 of the Transfer of Property Act. According to the statutory provisions, where on a transfer of property an interest is created in favour of a person to take effect only on the happening or not happening of a specified event, he acquires a contingent interest in the property. For example, assume there is a stipulation that A's property is to be transferred to C in case A and B die before the age of 18. In such a case, C has a contingent interest in the property until A and B die, under the age of 18. An interest is contingent when some contingency is to happen before the person is qualified to take possession of the property.
These points of distinction between a vested and contingent interest need to be noted:
Alienable or not
A contingent interest is inalienable. On the other hand, vested interest is heritable and transferable.
Condition to be fulfilled
A contingent interest depends solely on the fulfilment of a condition, so that in case of non-fulfilment of the condition, the interest may fall thorough. On the other hand, a vested interest does not depend on the fulfilment of any condition, and takes effect from the date of the transfer of property.
Present right
In case of a contingent interest there is no present right. However, there is a promise to give one and is altogether dependent on the fulfilment of a condition. As against this, in case of a vested interest, there is a present and immediate right. Only, its exercise is postponed.
Contingent interest
In case of a contingent interest, a transferee gets an interest of a contingent nature, which may be defeated by reason of non-fulfilment of the precedent conditions. This is not the case with a vested interest.
It is to be noted that if under a transfer of property, a person becomes entitled to an interest in a property on attaining a particular age, and the transferor also gives him any income from such an interest before he reaches that age, or directs the income to be used for his benefit, such an interest is not a contingent interest.
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