AGREEMENT BY WAY OF WAGER (SECTION 30)

 AGREEMENT BY WAY OF WAGER (SECTION 30)

Section 30 declares wagering agreements as void. The Section is as follows:

Agreement by way of wager void and no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted to any person to abide by the result of any game or other uncertain event which any wager is made.

Exception in favour of certain prizes for horse racing-This Section shall not be deemed to render unlawful a subscription or contribution, or agreement to subscribe or contribute, made or entered into for or toward any place, prize or sum of money, of the value or amount of five hundred rupees or upwards, to be awarded to the winner or winners of any horse race.

Section 294-A of the Indian Penal Code not affected-Nothing in this Section shall be deemed to legalize any transaction connected with horse racing, to which the provisions. of Section 294-A of the Indian Penal Code apply."

What is a wagering agreement

The Contract Act does not define a wagering agreement. The nature of such an agreement has been explained by Hawkins J. in Carlill v. Carbolic Smoke Ball Co., (1892) 2 Q.B. 484, at pp. 490-91 in the following words:

A wagering contract is one by which two persons, professing to hold opposite views touching the issue of a future uncertain event, mutually agree that, dependent upon the determination of that event, one shall win from the other, and that other shall pay or hand over to him, a sum of money or other stake; neither of the contracting parties having any other interest in that contract than the sum or stake he will so win or lose, there being no other real consideration for the making of such contract by either of the parties.

Essentials of a wagering agreement

1. The parties have opposite views regarding an uncertain event.

2. There are chances of gain or loss to the parties on the determination of the event one way or the other.

3. The parties have no other interest except winning or losing of bet.

1.      Opposite views about an uncertain event

If A holding the view that it would rain on 1st January next and B saying that it will not, agree that if it rains on that day, B will pay Rs. 100 to A, and if it does not rain, A will pay Rs. 100 to B, it is a wagering agreement.

2.      Chances of gain or loss to the parties

There should be a chance of any one party winning and the other losing, on the determination of the event one way or the other. Thus, if A agrees to pay B Rs. 100 if it does not rain on 1st January next, and B agrees to pay A Rs. 100 if it rains on that day, each party has a chance to win or lose, depending upon the determination of the event one way or the other. If either of the parties may win but cannot lose, or may lose but cannot win, it is not a wagering contract.

3.      No other interest in the event except the amount of bet

In a wagering contract neither of the contracting parties have any other interest in that contract other than the sum or stake he will so win or lose, and there is no other real consideration for the making of such contract by either of the parties.' This factor distinguishes a wagering agreement from the other valid conditional contracts like contracts of insurance. In an insurance contract, it is necessary that the person affecting insurance must have "insurable interest" in the subject-matter insured. Insurable interest means an interest in the existence and preservation of the thing insured.

A wife, for example, has an insurable interest in her husband's life and she can take an insurance policy on her husband's life by paying some regular premium. A person can take an insurance policy covering the risk of fire to the property owned by him. But if a person does not have an insurable interest in the life of another person, or in the property insured, the agreement will be a mere wager and, therefore, void. If you take an insurance policy to insure Taj Mahal or Kutab Minar, the agreement would be void, but if you get your own house insured, the agreement will be valid. In the absence of an insurable interest, the receiving of money depends on the happening of an event which does not cause any loss to the recipient and, therefore, such an agreement is void.

Speculative Transactions

One of the forms of wagering contracts is an agreement to pay differences only, rather than actually making or taking the delivery of the goods. Although in a contract, the parties may agree about the sale of goods at a stated price at a future date, but their real intention may not be the supply of goods but only the payment of difference in the price by one party to the other, depending on the rise or fall of market. Such an agreement is wagering.

Teji Mandi Transactions

It is a contract under which one of the parties is given a double option either to purchase or to sell, whichever would suit him, a certain commodity, at a certain rate, on a specified future date. For example, A, by paying a certain premium or commission per bag to B, is given an option by B to purchase or sell 100 bags of wheat at Rs. 200 per bag on 1st January next. If the price of wheat on 1st January comes down, eg, to Rs. 180, A can exercise the option to sell the wheat at the agreed price of Rs. 200 per bag. On the other hand, if the price of wheat rises, e.g., to Rs. 225 per bag. A may exercise the option to purchase the same at the agreed price of Rs. 200. In case of such transactions also, the validity of the contract would depend on the fact whether the parties intended to actually affect the delivery of the goods or not. If the intention is to settle by paying the differences only, the agreement would be a wager, and thus void.

Validity of wagering agreements and collateral transactions

Section 30 declares an agreement by way of wager as void. It further states that "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.