BLOG- What are Wagering Agreements?

The term ‘wager’ means a bet. Wagering agreements means an agreement by which one person agrees to pay money or money’s worth to another on happening or non-happening of a future and uncertain event. Under Sec. 30 of the Indian Contract Act, 1872, agreements by the way of wager are void. It cannot be enforced in any court of law and no suit shall be admitted for recovering any amount under wagering agreement.

It becomes important to note that Sec. 30 of the act only states that such agreements are vid but the same does not define “wager”. A wagering agreement is one by which two persons holding opposite views on issues of a future uncertain event. Thus, wager is a bet or gambling. It involves an uncertain event, mutual chances of gain or loss and both parties do not have control over the event.

Essentials of Wagering Agreements:

1. Uncertain Event: The first essential thing to wager is performance of bargain or betting must depend upon determination of uncertain event. It involves the contemplation of a future event and relates to a past event only when the parties to the agreement are not aware of its result.
2. Mutual Chances of Loss or Gain: The second feature is that it depends upon happening or non-happening of an event; either party should stand to win or lose. That means if there are no such mutual chances of gain or loss, there is no wager.
3. Neither Party to have Control over the event: Thirdly, neither party should have any interest in happening or non-happening of event by one way or the other. If one of the parties has the event in his own hands, the transaction lacks an essential ingredient of wager.
4. No interest in the event: The parties to the agreement should not have any interest in the event in his own hands, other than the sum or stake he will win or lose. This is a major difference between a wagering agreement and a contract of insurance.
5. Opposite views on Uncertain Event: Lastly, a wagering agreement is one by which two persons hold opposite views about the future uncertain event and dependent upon the same, one goes on to win from the other party.

e.g. if ‘A’ holds the view that it would rain on 1^st Jan, and B would say the opposite, it is a wagering agreement.

Exceptions to Wagering Agreements:

1. Game of skills such as puzzles, athletic and crossword competitions do not come under the purview of wagers
2. Horse Racing
3. Shares
4. Contract of Insurance
5. Prize Competitions and
6. Lotteries

By Maahi Mayuri

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