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Discuss the law regarding wagering agreements under the Indian Contract Act.

Discuss the law regarding wagering agreements under the Indian Contract Act.

Course: B.Com

1 Answer

A wagering agreement is a promise to give money or money’s worth upon the determination or ascertainment of an uncertain event. In other words, it can also be said that a wagering agreement is an agreement under which money or money’s worth is payable, by one person to another on the happening or non-happening of a future uncertain event. Such agreements are chance oriented and thus, are completely uncertain.

Essentials of a Wagering Agreement:

  • Uncertain Event: The performance of the bargain must depend upon the determination of an uncertain event. The event may be regarded as uncertain, if it is yet to take place or it might have already happened but the parties are not aware of the same.
  • Mutual chance of gain or loss: On the determination of the contemplated event each party should stand to win or lose.
  • Neither party to have control over the event: If one of the parties has the event in his own hands, then the transaction is not treated as wager, thus, non of the parties should have control over the transaction.
  • Promise to pay money or money’s worth: The promise should be to pay money or money’s worth only so as to constitute wager.
For example:
  • An agreement to settle the difference between the contract price and market price of certain goods or shares on a particular day.
  • An agreement to buy a lottery ticket.

Effects of Wagering Agreements: According to Section 30 of the Act, agreements by way of wager are 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 on which any wager is made.


Section 294-A of the Indian Penal Code, clearly specify that, unless the wager amounts to a lottery, it is not illegal but simply void. For example, A borrows Rs. 500 from B to pay C, to whom A has lost a bet. Agreement between A and B is valid. However, such agreements have been declared void in Maharashtra and Gujarat.

Lotteries: Lottery is an agreement for the distribution by chance among persons purchasing the tickets. The motive of the participant must not be gambling.

Exception to Wagering Agreements: These refer to those transactions which are not regarded as wagers.

  • 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. The intention to settle in price differences, the transaction is a wager and thus void.
  • Prize competitions which are games of skill.
  • An agreement to contribute to a plate or prize.
  • Contracts of Insurance.

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May 16, 2019