INTRODUCTION
The word ‘wager’ in layman language means ‘bet’. The term ‘wager agreements’ has not been defined in The Indian Contract Act, 1872. But the nature of such an agreement is explaine by Hawkins J. in the case of Carlil v. Carbolic Smoke Ball Co.[1] “ A wagering contract is a one by which two persons, professing to hold opposite views touching the issue of a future uncertain event, mutually agree that, dependent on the determination of that event, one shall win from the other, and other shall pay or handover to him, a sum of money or another stake; neither of contracting parties having any other interest in that contract than the sum or the stake he will so win or lose, there being no other real consideration for making such contract by either of the party”.
Section 30 of the Indian Contract Act, 1872 declares wagering agreements as void. Also according to this section no suit shall be brought by any of the parties; for recovering anything alleged to be won by wager. But this section keeps betting in horse racing exclusively out from the room of wager. Also safeguards it from the provision of sec. 294A of IPC to which it may apply.
Features of Wagering Agreement
I. The parties agreeing should have opposite views regarding an uncertain event
For an agreement to be a wagering agreement; the subject matter of agreement must be reliant on an uncertain event. And the parties to the agreement should have the opposite view regarding its happening.
It was held in the case of Dayabhai Tribhovandas v Lakshmichand[2] if any of the parties can influence the consequences of the wager, the agreement will lack an essential feature of a wager.
In the case of Carlil v. Carbolic Smoke Ball Co.[3] it was also held that the parties should have opposite views touching the issue of a future uncertain event. But that does not appear to be wholly correct. The opposite vies could be in respect of past or present fact or event also. The only thing need is uncertainty in the minds of the parties about the determination of the event one way or the other.
II. There must be chances of gain or loss to the parties on the determination of the event
There must be chances of gaining one party and losing of others. It is on the determination of the event one way or the other. For instance if X agrees to pay Rs. 500 to Y if it rains on that day and Y agrees to pay Rs. 500 to X if it does not rain on that day. This would amount to a wagering agreement as both the parties have the chance to win or lose. But it may be noted that if either of the parties may lose; but can’t win or vice versa such a situation will not give rise to a wagering agreement.
III. The parties must not have any other interest except winning or losing the bet
In a wagering agreement both the parties are not interested in the agreement but in the amount or sum the party will so win/lose. And there is no real consideration for the making of that agreement. If either of the parties has some other interest apart from the sum at stake, it will not constitute a wager.
The ultimate purpose of the agreement must be that of betting. If either of the party has any interest apart from that of betting; the agreement would cease to be called wagering in nature. For example an insurable interest in the contract will not be called as wagering agreement.
So there must be no other considerations for the making of such agreement by either of such parties. Thus speculation is not wagering by itself. In the delivery of the judgment of the case Bhagwandas Parasram v Burjorji Ruttonji Bomanji[4], it was observed by Sir Lawrence Jenkins – “Speculation does not necessarily involve a contract by wagering and to constitute such a contract the common intention of wagering is essential”.
EXCEPTIONS OF WAGER AGREEMENTS
Few conditions prove as an exception in the ambit of wagering agreements and are treated as a valid contract under law. Such as insurance contracts, skill-based competitions, and betting on a horse race.
Insurance contracts are special contracts called a contract of indemnity. Thus are not kept in the purview of general contracts. It is used to safeguard the interest of another party against damage. On the other hand in wagering contract the party is not concerned with the happening or non-happening of event.
Skill involving competition can’t be termed as wager. It is because it requires a significant amount of skills and is not determined by the probability of a dubious event. For example sports competitions like chess etc. but if completion is dependent on uncertainty and not skill like lottery, then it would be a wager.
Betting on a horse race is kept as an exception in this space as the law considers it as a sport solely not dependent on luck but also skillset of the jockey as a very crucial element in the race. In the case of Dr. K.R. Lakhsman v. State of Tamil Nadu[5], the bench observed that “In view of the discussion and authorities referred, we hold that horse-racing is a game where the winning depends substantially and preponderantly on skill.”
CONCLUSION
It is mandatory for any agreement to fall under the category of general contracts to fulfill its essentials and if it does not it shall not be considered as a valid contract as per law. But the nature of wager agreements is not of invalid contract but void as per section 30 of the Indian Contract Act, 1872. Law does not recognize this form of agreement and thus there arises not legal liability on part of the agreeing parties. It is to be noted at the same moment that performing a wagering agreement is not illegal but only void. People are free to enter into wager but that would not be entertained by the court of law. Thus, it can be concluded from its nature that all illegal agreements are void but a void agreement may necessarily be illegal.
Specifically, exemption of the horse race as only sport from the bracket of wager agreements gives rise to the question of betting in other sports which is ignored by our law. Considering cricket as an example of sports that require a tremendous amount of skills should also be given a space in the exception of the wager. Here the ambiguity in respect to wager agreements comes into the picture because if horse race can be exempted from a wager by applying the principle of skillset then why not other sports.
A study of wager agreements yields deduction that section 30 of the Indian Contract Act, 1872 requires amendment and a complete definition and meaning of term ‘wager agreements’ to wipe out the ambiguity it faces.
References:
[1] (1893) 1 QB 256 (CA)
[2] (1885) ILR 9 Bom. 358
[3] (1893) 1 QB 256 (CA)
[4] AIR 1917 PC 101
[5] 1996 AIR 1153, 1996 SCC (2) 226
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