Wagering Agreement & Contingent Contract

WAGERING AGREEMENT
The word Wager means a BET
A wager is an agreement by which money is payable by one person to another
on the happening or non happening of a future, uncertain event.
Example:
A & B agree with each other that if it rains tomorrow, A will pay B Rs.100
and if does no train tomorrow, B will pay A Rs.100.
Now this is a wagering agreement, as the event:
If it rains tomorrow is an uncertain event and there is mutual chance of a
gain and loss for both for A and B.

Characteristics
The characteristics of a wager agreement are as follows:
The consideration for the promise under a wagering agreement is to
pay or get money.

The money is payable on the happening or the non-happening of an

event.
The agreement depends on a future and uncertain event.

The essence of gaming and wagering is that one party is to win and
the other to lose.
In wagering agreement no party has control over the event.

Commercial transactions are valid, but to pay price differences in a

wagering agreement is void.

Special Cases
Following are the transactions that are not wagers:
Shares. 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.
Games of Skill. For a game to be considered a game of skill
under Indian law, the position of law has been so far that it need
not be a 100% skill based game, but predominantly a skill based
game. A game of mere skill is simply one in which the element of
skill predominates the element of chance.
Contract of Insurance. Here the contract of insurance seeks to
compensate the loss faced by the insured on happening of an
event which is uncertain. In case of life insurance, the amount
payable on happening of death of the insured is agreed and
decided in advance.

Exceptions
Lotteries:
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.

Crossword Puzzles:
Crossword puzzles in which prizes depend upon correspondence of the
competitors solution with a previously prepared solution is a wager.
EXCEPTION: 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.

CONTIGNENT CONTRACT
A Contingent Contract is a contract to do or not to do
something, if some event, collateral to such contract,
does or does not happen.
Example:
A promise to pay B a sum of money if a certain ship returns within a year.
The contract may be enforced if the ship returns within a year, and becomes
void if the ship does not come within a year.

Characteristics
The characteristics of a contingent contract are as
follows:
The performance of such contract depends on a contingency,
i.e., on the happening or non happening of the future event.

The event must be collateral i.e., incidental to the contract.

The contingency is uncertain.

DIFFERENCE
Subject

Wagering Agreement

Contingent Contract

Validity

A wagering agreement is
void.

A Contingent contract is
valid.

Dependency

It depends on happening
or non happening of an
event, but the contract is
void.

It depends on happening
or non happening of an
event, but the contract is
valid.

Reciprocal Promise

It consists of certain
reciprocal promises.

It may not contain

reciprocal promises.

Interest of the Parties

The parties have no

interest in either getting or
paying money.

Either party or both may

have an interest in the
subject matter of the
contract.

THANKS !!!