What is a wager; agreements by way of wager void; some special cases; difference between wagering agreements and insurance contracts.

1. EFFORTS BY:- HIMANI GUPTA
ROLL NO. : 131106

2.  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.

3.  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.

4.  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.”

5. 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.

7.  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.”

8.  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.

9.  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.

10.  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.