Wagering Contracts

All contracts are agreements, but all agreements are not contracts. It is the same with a wagering agreement, where it is an agreement but not a contract because it doesn’t fulfil the conditions under section 10 of ICA 1872, as wagering is expressly declared to be void. The Indian contract act does not define wager in words or action, just states that a wagering contract is void and legal. Due to the lack of clarity of the concept regarding the type of wagering, the question can be asked under which criteria wagering can be classified. Section 30 of ICA considers other merit-based wagers like crosswords and some skill-based wagers like betting in a horse race, not void. It is clear from some cases precedents that an act may be void but not illegal, or maybe illegal but not void.

A wager is not illegal but void which means that a person who was engaged in betting will not get a remedy for the breach of the same, still such agreement between those two will not be illegal. It can be signified that if the government is regulating and legalizing skill-based betting in India then that must be justiciable as it will be codified and enacted under the name of the constitution. The object of the contract has to be valid if it is based on skills like in sports and gaming, and it no longer will be considered void just like betting on horse races (as mentioned in section 294 A). But then again, the question will arise regarding the objectives that section 30 was supposed to fulfil, as it was included in the constitution to terminate the evil of gambling and betting from society.

Allowing betting to take place will ultimately lead to a situation where society has to accept legal betting, which means the relevance of section 30 can be questioned. To understand wagering agreements better, the next section will explain the definitions of wagers from various sources with their elements and then compare it with the various synonyms like gambling and betting.

Wager and its elements

An agreement where two persons promise each other to pay a certain amount based on an uncertain future event is known as a wagering agreement. The future event should be such that it must be the result of action independent of both parties. The compulsion is that one party should have a win and the other should lose, if there is an agreement where only one party can win or one party can only lose such agreement can’t be considered as a wagering agreement. There must be a mutual understanding between the parties that the win of one party will result in the loss of the other. According to the Oxford English dictionary, the wager is “Risk (a sum of money or valued item) against someone else’s on the basis of the outcome of an unpredictable event; bet. Giving or promising to give a certain amount of money to the other person based on any future uncertain event is called a wager. The next question which arises related to wager is how betting and gambling are synonymous with each other. According to the United Kingdom gambling act 2005, it defined gambling in such a way that it includes gaming, participating in lotteries, wagering, and betting all under the same umbrella. It defines betting as an act of inducing or accepting an amount based on the outcome of an uncertain event like a race, competition or based on the likelihood of it happening or not happening which may be true or may not be true in its course of action.

The next thing which should be focused on is the element of a contract that transforms a normal agreement into a wagering contract. They are

1. Two parties – agreement should be between two or more parties with two defined sides.

2. Uncertain event – the wager should be placed on an uncertain event and wager should be based on the result only.

3. Mutual chances of gain and loss – the possibility to win should be present for both parties. One loses then the other wins.

 4. Neither party has control over the event – both the parties should have no control over the uncertain event. no malpractice allowed.

 5. No other interest in the event – parties will only bound till wager is complete after the uncertain event happens.

Aishwarya Says:

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