WAGERING AGREEMENTS

EFFORTS BY:- HIMANI GUPTAROLL NO. : 131106

WHAT IS A WAGER? Literally the word ‘wager’ means a

‘bet’. EXAMPLE: A and B mutually agree that if

it rains today A will pay B Rs.100 and if it does not B will pay A Rs.100 .

It is essential to a wagering contract that each party under it may either win or lose. If either of the parties may win but cannot lose, or may lose but cannot win, it is not a wagering contract.

ESSENTIAL FEATURES OF A WAGER There must be a promise to pay money or

money’s worth. The promise must be conditional on an event

happening or not happening. The event must be an uncertain one. Each party must stand to win or lose under the

terms of agreement. No party should have a proprietary interest in the

event. The stake must be the only interest which the parties have in the agreement.

AGREEMENTS BY WAY OF WAGER, VOID

Section 30 lays down that “agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made.”

EXAMPLE: Where C and D enter into a wagering

agreement and each deposits Rs. 100 with Z instructing him to pay or give the total sum to the winner, no suit can be brought by the winner for recovering the bet amount from Z, the stakeholder. Further if Z had paid the sum to the winner, the loser cannot bring a suit, for recovering his Rs.100, either against the winner or against Z even if Z had paid after loser’s definite instructions not to pay.

SPECIAL CASES

Agreements for sale and purchase of any commodity or share market transactions in which there is a genuine intention to do legitimate business are not wagering agreements.

“In order to constitute a wagering contract, neither party should intend to perform the contract itself, but only to pay the differences.”

LOTTERIES A lottery is a game of chance and hence

is a wagering transaction. It is not only void but also illegal

because Section 294-A of the I.P.C declares ‘conducting of lottery’ a punishable offence.

EXCEPTION: If a lottery is authorized by the government, the only effect is that the persons conducting the lottery will not be guilty of a criminal offence, but it will remain a wager alright.

CROSSWORD PUZZLES Crossword puzzles in which prizes depend

upon correspondence of the competitor’s solution with a previously prepared solution is a wager.

But if the prizes depend upon skill and intelligence then it is a valid transaction.

Hence prize competitions which are a game

of skill and in which effort is made to select the best competitor are not wagers. However amount prize in such competitions should not exceed Rs.1000.

INSURANCE CONTRACTS Valid contracts even though they provide for

payment of money by the insurer on the happening of a future uncertain event. They differ from wagering agreements in 3 aspects:

INSURANCE CONTRACTS

WAGERING AGREEMENTS

Holder must have an insurable interest in the event. Thus these contracts are entered into to protect an interest.

There is no interest to protect and the parties bet exclusively to make easy money.

Based on scientific and actuarial calculation of risks.

They are a gamble without any scientific calculation of risks.

They are regarded as beneficial to the public.

They don’t serve any useful purpose.