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WAGERING AGREEMENT
IN THE
INDIAN CONTRACT ACT
1872

INDEX
REASONS TO CHOOSE THE TOPIC
INTRODUCTION
TYPE OF VOID CONTRACTS
VOID AGREEMENTS
WHAT IS WAGERING?
ESSENTIALS TO A WAGER
EFFECTS OF WAGERING
EXAMPLES TO A WAGERING
CASE LAWS
EXCEPTIONS OF WAGERING
CAN A WAGERING AGREEMENT BE LAGALLY ENFORCEABLE?
CONTINGENT AGREEMENT VS. WAGERING AGREEMENT
INSURANCE AGREEMENT VS. WAGERING AGREEMENT
CONCLUSION
BIBLIOGRAPHY

WAGERING AGREEMENT

REASONS TO CHOOSE THE

TOPIC
Coming across Wagering Agreements
and Contracts while studying The Indian
Contract Act, 1872, in the CPT
examination, we wanted to study it in
detail.
Hence, taking Wagering Agreement in
The Contract Act as our topic, we begun
our research.
Accordingly, we started taking interest
in the topic and now we present it.
The increase in number of wagering
agreement now-a-days
also make us
WAGERING AGREEMENT
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INTRODUCTION
Our topic is WAGERING

AGREEMENTS IN THE CONTRACT ACT,

1872.
We are going to throw light upon
what is wagering agreement and its
related essentials, effects,
exceptions along with cases.
This agreement has been also
misunderstood as a contingent
agreement or insurance contract,
which will be discussed.

TYPES OF VOID
AGREEMENTS
Agreements

by persons who are not

competent to contract. (Sec 10 & 11)
Agreements with unlawful
consideration or object. (Sec 23)
Agreements the meaning of which is
uncertain. (Sec 29)
WAGERING AGREEMENTS. (SECTION 30)
Agreement to do impossible acts. (Sec
56)
WAGERING AGREEMENT

WHAT IS WAGERING?
A wager contract is a contract in
which one person promises to
another to pay money or moneys
worth by the happening of an
uncertain future event in
consideration for other persons
promise to pay if the event does
not happen.

WAGERING AGREEMENT

ESSENTIALS TO A
WAGERING AGREEMENT
It

must be dependent upon

uncertain event.
There must be mutual chances of
gain or loss.
Whether an agreement is a wager or
not depends on the activity and not
on the words of the agreement.

The

parties must not have any other

interest in the event.
The parties must not have any
control over the event.
The promise must be to pay money or
moneys worth.

WAGERING AGREEMENT

EFFECTS OF WAGERING
EFFECTS OF MAIN TRANSACTIONS:
- The winner in wager cannot recover
the stake money from the other party to the
agreement.
- The winner cannot recover the money
deposited with a third person (stakeholder).
- Where the money has already been
paid to the winner, cannot be recovered
back from him.
- A new promise to pay the stake money
(already won) upon a wager, is also void.

WAGERING AGREEMENT

10

EFFECTS ON COLLATERAL TRANSACTIONS:

- Wagering agreements are void but not

unlawful, except in Gujarat and Old Bombay.
- Therefore, the transactions to the main
transactions are not void.
- Thus these transactions are valid and
enforceable.
- E.g.: A, borrowed Rs. 500 from C, laying a
bet with B on a car in a race. A loosing the bet,
paid Rs. 500 to B. Yet A is liable to repay the
amount to C, as the contract is a collateral to
the wagering agreement, thus not being void.

WAGERING AGREEMENT

11

EXAMPLES TO WAGERING
Gambling is the wagering of money or something
of material value (referred to as "the stakes") on
an event with an uncertain outcome with the
primary intent of winning additional money and/or
material goods.

- The outcome of the wager is evident within a

short period.
- Gambling in India is heavily restricted, although
there is extensive illegal gambling throughout the
country.
- The Indian gambling market is estimated to be
worth US$60 billion per year, of which about half is
illegally bet and black money.
WAGERING AGREEMENT

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In organized sports, match fixing, game

fixing, race fixing, or sports fixing occurs as
a match is played to a completely or partially
pre-determined result, violating the rules of
the game and often the law.
Where the sporting competition in question
is a race then the incident is referred to as
race fixing.
EXAMPLE :(August 2010 Cricket: England v/s
Pakistan- England by the 4th day of their test
match, is up winning against Pakistan by an
inning and 225 runs, making this Pakistan's
worst loss in Cricket in 58 years. It is
discovered, however, that the team was
subject to match fixing causing a halt of the
WAGERING AGREEMENT
game and controversy
to who is responsible13

CASELAW
S
Gherulal Parekh vs. Mahadeo Das(1959)The question for determination in this appeal was whether an
agreement of partnership with the object of entering into
wagering transactions was illegal within the meaning of Sec.
30 of the Indian Contract Act. It has been laid down by the
Supreme Court, in Gherulal Parekh vs. Mahadeo Das that
though a wager is void and unenforceable, it is not forbidden
by law. Hence, a wagering agreement is not unlawful, under
section 30, of the Contract Act, and therefore, the transactions
collateral to the main transaction are enforceable.

WAGERING AGREEMENT

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Nordenfelt vs Maxim Nordenfelt

Guns and Ammunition co ltd.(1894)
Inventor sold the goodwill of a gun company to
a buyer. The agreement was - Seller will not
practice the same trade for 25 years and the seller
will not do any business that will compete with the
business carried on by the buyer at that time. It
was held that the first part is valid because it is
reasonable but the second part is invalid because
it is unreasonable, thus it was declared to be a
wagering agreement.

WAGERING AGREEMENT

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Carlill v. Carbolic Smoke Ball Co. [1893]

Carbolic Smoke Ball Co. (D) manufactured and sold The Carbolic Smoke
Ball. The company placed ads in various newspapers offering a reward of
100 pounds to any person who used the smoke ball three times per day as
directed and contracted influenza, colds, or any other disease. After seeing
the ad Carlill (P) purchased a ball and used it as directed. Carlill contracted
influenza and made a claim for the reward. Carbolic Smoke Ball refused to
pay and Carlill sued for damages arising from breach of contract.
Judgment for 100 pounds was entered for Carlill and Carbolic Smoke Ball
appealed.

WAGERING AGREEMENT

16

EXCEPTIONS TO A
WAGER:
GAME OF
GAME
SKILLSOF
SKILLS
HORSE RACES
HORSE RACES
TRANSACTION
TRANSACTION
S OF SALE
S OF SALE
INSURANCE
INSURANCE
CONTRACTS
CONTRACTS
WAGERING AGREEMENT

17

GAMES OF SKILLS:
-Prize competitions which are games of skill,
e.g., picture puzzles, athletic competitions.
Thus, an agreement to enter into a wrestling
contest in which the winner was to be
rewarded bythe entire sale proceeds of
tickets, was held not to be wagering contract.
-A crossword competition is not a wager since
it involves skill.
-Prize competitions in games of skill are not
wagers provided the
prize money does not exceed Rs. 1000.

WAGERING AGREEMENT

18

HORSE RACES:
-An agreement to contribute or
subscribe towards any plate, prize
or sum of money, of the value or
amount of five hundred rupees or
upwards to be awarded to the
winners of any horse-race is valid
agreement and not a wager.
-However, any transaction
connected with horse racing which
is declared illegal.
WAGERING AGREEMENT

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TRANSACTIONS OF SALE:
-Transactions for the sale and
purchase of stocks and shares, or for
the sale and delivery of goods,
with a clear intention to give and
take delivery of shares or goods, as
the case may be.
-Where the intention is only to settle
in price difference, the transaction is
a wager and hence void.

WAGERING AGREEMENT

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INSURANCE CONTRACT:
-An insurance contract which is
essentially a contract of
speculation is not a wagering
contract.
-There is an insurable interest in
an insurance contract while there
is no such interest in a wagering
contract.

WAGERING AGREEMENT

21

CAN A WAGERING
AGREEMENT BE LEGALLY
ENFORCEABLE?
In

a wagering agreement, any of the party does

not have and insurable interest in the subject
matter of the agreement except resulting gain or
loss.
This is the main distinguishing feature of a valid
contingent contract when comparing to a wagering
contract.
That is why an insurance contract is different
from a wagering agreement.
Therefore, the parties who enter in to the
wagering agreements must play on their own risk
and cannot rely on court of law for any relief.

For an example,
- A and B enter in to wagering agreement
and each deposits Rs.1000 with a third party
Y advising him to pay the total sum for the
winner.
- But no suit can be brought by any of the
winner or loser for the purpose of recovering
the sum due to the winner from Y.
- Thus, it is impossible for a loser to bring
an action against the winner for recovering
his Rs.1000.
However, it is very clear that the wagering
agreements are void and cannot be
enforceable before the law.

CONTINGENT AGREEMENT
VS.
WAGERING
AGREEMENT
The agreement need not

1)

contain any mutual

CONTINGENT
AGREEMENT
promises.
2)
All contingent agreements
are not necessarily wager
agreements.
3)
The uncertain event may be
within the power of one of
the parties.
4)
In a contingent agreement,
the parties are interested in
the occurrence of the event.
5)
The future event is merely
collateral or incidental.
6)
Contingent agreement is not
void unless it is dependent
on the occurrence of an
impossible event.

WAGERING AGREEMENT
1)

2)

3)

4)

5)

6)

The agreements is bound by

mutual or reciprocal promises.
All wager agreements are
contingent contracts.
In a wager, the uncertain
event is beyond the power of
both the parties.
The parties are not interested
in the occurrence of the event,
apart from the money earned
or lost.
The future event is the sole
determining factor of the
contract.
Wagers are void.

WAGERING AGREEMENT

24

INSURANCE AGREEMENT
VS. WAGERING AGREEMENT
INSURANCE AGREEMENT
1. A contract of insurance is a contract to
make good the loss of property (or life) of
another person against some consideration
called premium.
2. In a contract of insurance the insured
must have insurable interest. Without
insurable interest it will be a wagering
agreement.
3. In a contract of insurance both the parties
are interested in the protection of the
subject matter, i.e., there is mutuality of
interest.
4. Except life insurance, a contract of
insurance is a contract of indemnity, i.e. a
contract to make good the loss.
5. Contracts of insurance are based on
scientific and actuarial calculation of risks.

AGREEMENT
1. AWAGERING
wagering agreement
is an agreement
to pay money or money's worth on the
happening of an uncertain event.
2. No insurable interest is necessary in
case of a wagering agreement.
3. In a wagering agreement there is
conflict of interest and in reality there is
no interest at all to protect.
4. In case of a wagering agreement there is
no question of indemnity. On the
happening of the event fixed amount
becomes payable.
5.Wagering agreements are not based on
such calculations and are in the nature of
gambling.

WAGERING AGREEMENT

25

CONCLUSION
Thus we conclude that:

Wagering Agreements are Void.

Though agreements collateral to a wager

are valid and enforceable by law.

The promise is dependent on an uncertain

event.

The promise must be to pay in money or

moneys worth.

The parties must not have any control over

the event.

Wagering agreement s are totally different

from Insurance Contracts and Contingent
WAGERING AGREEMENT
Contracts.

26

BIBLIOGRAPHY:

www.google.com
www.britanica.com
www.ladbrokes.com
www.ask.com
www.apexwagering.com
World Book
Britannica Encyclopedia
Encarta

WAGERING AGREEMENT

27

THANK
YOU!
WAGERING AGREEMENT

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