DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

NYAYAPRASTHA “, SABBAVARAM,

VISAKHAPATNAM – 531035, ANDHRA PRADESH

Project Topic- A Comparative Study On Contingent And Wagering Contract

Name of the student: Rashie Sharma

Roll No.: 22LLB093

Semester: 2nd

Name of the program: 5-year B.A., LL.B. (Hons.)

Name of the Faculty Member: Ms. Suneetha B.V.S

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 ACKNOWLEDGEMENT

Prof. Mrs. BVS Suneetha, my project supervisor, supervised this research from the start, and her
expertise and experience were invaluable as I wrote "A Comparative Study On Contingent And
Wagering Contract." It has been a great learning opportunity for me to work with her. I'd like to
give special thanks to the academic department and library staff at DAMODARAM
SANJIVAYYA NATIONAL LAW UNIVERSITY, without whom I would not have been able to
finish this assignment in the allotted time. I'd also like to thank my family and friends, who have
always been there for me and whose ideas and insights have been invaluable as I've worked on
this endeavour.

Thank you

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 TABLE OF CONTENTS

ABSTRACT...............................................................................................................................................4
SYNOPSIS.................................................................................................................................................5
INTRODUCTION.....................................................................................................................................6
CONTINGENT CONTRACT..............................................................................................................6
ESSENTIALS ELEMENTS:............................................................................................................7
WAGERING AGREEMENT...................................................................................................................8
2.1 ESSENTIALS OF WAGERING AGREEMENT..........................................................................9
2.2 EFFECTS OF WAGERING AGREEMENT..........................................................................10
COMPARISON.......................................................................................................................................12
CONCLUSION AND SUGGESTION...................................................................................................14
REFERENCE:.........................................................................................................................................15

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 ABSTRACT

The first section of this project defines the terms "contingent contract" and "wagering
agreement." “According to section 31 of the Indian Contract Act, a contingent contract is a
contract to perform or not do something depending on the outcome of an event that is collateral
to the contract.” “Wagering transactions or wagers are agreements made between the parties on
the basis or condition that cash or a specific amount of rupees is owed by the first party to the
second party on the occurrence or happening of a likely unknown incident or event, and vice
versa if the incident or event does not occur.”

“This paper attempts to describe the nature of contingent contracts and wagering agreements in
India and, to explain how a contract comes within the concept of contingency. The objective of
this paper is to not only explain how contingent contracts and wagering agreement function in
India, but also to compare how a contingent contract varies from a wagering agreement”

This study will also examine why certain contracts are viewed as illegal due to their wagering
nature. Why is betting viewed as a wagering agreement, which is null and void from the start, yet
insurance and indemnification are considered contingent contracts? This study aims to
investigate and provide an answer to the main topic. The Indian Contract Act of 1872 is also
discussed in regard to the study's discussion of the components and results of wagering and
contingency. In order to prevent or limit the presence or popularity of such wagering
arrangements in the Indian market, the study finishes with several recommendations and ideas
that must be implemented within the parameters of the applicable legislation.

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 SYNOPSIS
Objective:

objectives of this study are:

1. To analyse the two contracts.

2. 2) To identify any potential connections between them.
3. Third, to determine whether or not contracts are enforceable in different jurisdictions.

The Range of the Study:

We will limit the study to “laws mentioned in the Indian Contract Act and some English
laws.”

Significance of the Study:

This study will successfully help the viewers to “understand the different dimensions of
contingent contract and wagering agreement.”

Research Methodology:

The information is gathered from various sources like journals, books, internet, database,
archives, articles, reports and cases.The doctrinal method and comparative study methods
have been used.

Research Question:

Compare the size of the contracts and see if the nature, scope, and enforceability of the
contingent contract and the wagering deal are the same.

Research Mode:

OSCALA mode of citation is used by the researcher.

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 INTRODUCTION

Every contract needs to have a written understanding. There can't be a deal unless both sides
agree. When someone agrees to something, it becomes a promise. The deal is made by making a
promise in exchange for something. A contract is a legal deal between two or more people to do
or not do something for a fair price and a legal purpose. It is made when someone makes an offer
and it is accepted in full. It is used to get people to agree to do certain things in return for
something. Contracts can also be made based on whether or not something unknown will happen
in the future. These kinds of contracts are called "conditional."

Then there's the "wager" agreement, which is based on guessing whether or not an uncertain
event will happen. It's not illegal, but it's also not valid and can't be enforced, and it doesn't bind
the parties to any legal duties. Most of these deals are bad for one side and good for the other.
Even though the words "bet" and "conditional agreement" are often used together, there are a
few differences between the two. A conditional contract just shifts the risk of an unclear event to
the promisor. A bet, on the other hand, creates risk by letting people guess how it will turn out. A
"wager" has been thrown out because it sounds like betting or gaming. This page goes into detail
about other changes that are similar.

CONTINGENT CONTRACT

“Section 31 of Indian Contract Act” defined contingent contract as “a contract in which the
parties agree to do or not do something based on the occurrence or non-occurrence of a future
uncertain event.” 1 A contingent contract is one in which the promise to keep the promise rests
on something that may or may not happen in the future. A might agree to pay B Rs. 10,000 if B's
house burns down, for example. It's not clear how this deal works.

Contingent contracts include indemnity contracts, guarantee contracts, and insurance contracts
where the insurer's job depends on an event happening, like fire damage and destruction.
1
“Pollock & Mulla, The Indian Contract Act, vol 1” (16th Edn 2019).

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ESSENTIALS ELEMENTS:

The following should be true of a deal with conditions.

1. The performance of a contingent contract is based on whether or not a future event takes
place. A dependent contract is only valid if an event that is related to the contract happens or
doesn't happen.

2. Contract fulfilment must depend on something.

For example, if “A promises to deliver 100 sacks of wheat and B agrees to pay the price only
after that, the contract is a conditional contract, not a contingent contract, because the event on
which B's duty is based is part of the promise and not a separate event.”

3. The contract must be based on something that will happen in the future:

A contract is only thought to be contingent if the event is either going to happen or not happen in
the future.

4. The condition in question must be a part of the contract:

A dependent contract is one that depends on whether or not something happens. This must be
tied to the contract, but it can't be part of the deal. The situation must happen on its own.

Eg- If A agrees to give B 8,000 rupees as soon as some things arrive. This is not a contingent
contract because B has to pay for something that has nothing to do with the contract.

If A and B agree that each will pay the other 8,000 rupees if the things are brought to him by
Thursday. In this case, delivery on Thursday is part of the deal but not part of the money. This is
a contract with terms because of this.

5. The event can't just happen because the Promisor wants it to:

The promisor can't make the thing happen how he or she wants. In a dependent contract, the
promisor says that he or she has no say over what will happen.

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For example, if A agrees to pay B a certain amount and B leaves Mumbai on May 1, the deal
isn't completely up to B.

Nemi Chand and Ors. v. Harak Chand and Ors.

In this case, the court said that Section 32 of the Indian Contract Act of 1872 says that “a
contract to do or not do something depends on an uncertain future event, and the contract can't be
implemented until that event happens.” This is true. “But the person who says the contract isn't
valid because the event can't happen should look into the case and file a plea based on both the
law and the facts. If a party does not want to try a case, it is not the Court's job to look into it on
their own.”

WAGERING AGREEMENT
Since the word "wager" means "to bet," wagering deals are just like any other bets. Someone
said that they would lose or win something if a certain thing happened.

The Indian Contract Act has a section 30 that talks about bets. However, it doesn't describe a
wager. “In Carlill v. Carbolic Smoke Ball Co., a classic meaning is given as A wagering
contract is one in which two people who say they have different opinions about an uncertain
future event agree that, depending on the outcome of that event, one will win from the other and
the other will pay or give him a sum of money or other stake.” The only thing either side has to
gain or lose from the contract is the amount of money at stake. There is no other reason to make
such a contract. If either side can win but not lose, or if either side can lose but not win, then it is
not a game.

According to Sir William Anson, “a wagering agreement is a promise to give money or

money's worth in return for the determination or ascertainment of an uncertain event.” 2

2
“Sir William Anson, law of contracts,” (27th edn, 1998).

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2.1 ESSENTIALS OF WAGERING AGREEMENT
From the above description of a wagering agreement, you can figure out the following key
points.

1. Uncertain Event:
The first thing that must happen for a bet to be legal is that the contract must rest on something
that is unknown. People may not know what happened because the event hasn't happened yet or
because it has, but they don't know what happened. A bet is usually about something that will
happen in the future, but it can also be about something that happened in the past, but neither
person knew how it turned out or when it happened.
In the case Jethmal Madanlal Jokotia v. Nevatia & Co3, “it was decided that even though a bet is
usually about something that will happen in the future, it can also be about something that
already happened in the past but neither party knew how it turned out or when it did.”

2. Chances for both sides to win or lose: There must be two sides or groups that have the
same chance of winning or losing. Depending on the result, this means that one side will
win and the other will lose. It's not a bet if someone can win but not lose, lose but not
win, or can't win or lose at all. If only one person decides what will happen, the deal is
not a bet.

3. Promise to pay money or the value of money: For a promise to be a bet, it must be to
pay money or the value of money.

4. Neither party to have control over the event:

Neither party should have control whatever happens in either way. “If one of the parties
holds the event in his hands, the wagering agreement is incomplete as it was held in the
case Dayabhai Tribhovandas v Lakshmichand.4”

5. No other interest in the event:

3
“https://www.casemine.com/judgement/in/56b48d38607dba348fff1f09”
4
‘Dayabhai Tribhovandas v Lakshmichand,” (1885) ILR 9 Bom 358.
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 Furthermore, neither party should be interested in the outcome of the event other than the
amount or stake.
Example: Rahul insures his car against damage by purchasing a car insurance policy and
paying the related insurance payment. We may conclude that Jay has an interest in the
car, and that in the event of a future uncertain event, such as an accident, he will lose
nothing. As a result, it is not a wager.

2.2 IMPACTS OF WAGERING AGREEMENT

Bets are a waste of money and time. Section 30 of the Indian Contract Act says that agreements
made based on a bet are invalid, and no action can be taken to recover anything that is said to be
owed based on a bet or that was given to someone to take care of based on the outcome of a
game or other uncertain event on which a bet is made. In India, it is against the law to make a bet
that involves a lotto. (Indian Penal Code section 294-A).
Lotteries: When people buy lottery tickets, they get a chance to win something. People don't
have to be driven by games as the main thing. Section 294-A of the Indian Penal Code says that
running a raffle as part of a bet is against the law and punishable.

2.3 EXCEPTIONS TO WAGERS:

The following are the exceptions to wagering agreement:

1. Share Market Transactions:

When you buy and sell stocks with the only goal of giving and receiving shares, this is
not a bet. Unless the only goal is to make up for the difference in price, it will be called a
bet in this case.

2. Competitions involving skill

Skill competitions are not bets because they take a lot of skill to win and don't depend on
the chance of something unknown happening. But if the game is based on luck instead of
skill, like a lottery, it will be seen as a bet and won't count.
Some examples are sports, Crossword problems, etc.

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 In the event In Moore v. Elphick5, it was decided that a competition is not a bet or a
lottery if the winner is based on how good the solution is and skill plays a major part in
the competition.

2. Horse racing competitions

Some state governments may allow horse racing, and contributions of more than Rs 500
for the reward of such events are not considered illegal. “The Supreme Court concluded
in the case of K. R. Lakshmanan v. State of Tamil Nadu that horse racing was a game of
skill and that playing for stakes in a game of skill was not illegal.6”

3. Insurance Contracts
An insurance contract is a reimbursement contract that is meant to protect one party's
interests against loss and has an insurance policy. On the other hand, a betting contract is
a conditional contract that doesn't care if something happens or not. Insurance contracts
are not worthless by definition, but wagering contracts are, because the point of a
wagering contract is to gamble for money or something of value, while the point of an
insurance contract is to protect an interest.
“In the case of Northern India General Insurance Co. Ltd. Bombay Vs. Kanwarjit
Singh Sobti,7 A truck was transferred benami, or unlawfully, to another party by its
owner. Later, the vehicle was involved in a major accident, injuring a young army officer,
who sued the owner, the benamidar, and the insurance company for significant damages.”
“A claim was made that since a benamidar had no insurable interest, it was a wager. The
court dismissed these arguments, ruling that insurable interest existed and that the
benamidar was responsible for compensating the young army officer.”

VALIDITY OF WAGERING AGREEMENT

According to Section 30 of the Indian Contract Act of 1872, “wagering agreements are unlawful
and unenforceable, and the parties to a wagering agreement cannot take legal action to recover or

5
https://blog.ipleaders.in/wagering-agreement-and-its-essentials/
6
“K. R. Lakshmanan v. State of Tamil Nadu, 1996 AIR 1153.”
7
https://www.coursehero.com/file/p6t8uji/19-Northern-India-General-Insurance-Co-Ltd-V-Kanwarjit-Singh-Sobti-
AIR-1973-All/

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claim anything specified in the agreement. To safeguard public policy and morality, as well as to
restrict illegal behaviour like gambling, such agreements are void.”

In the case Badridas Kothari v. Meghraj Kothari, “two persons participated in share wagering
transactions, with one becoming indebted to the other. A promissory note was signed to satisfy
this obligation.” The note was found unenforceable by the court. A new agreement to pay money
won on a wager is also null and void.8

COMPARISON
“We've seen what contingent contracts and wagering deals are, and they sound a lot alike. But
since one is a contract and the other is an understanding, it is important to know how they are
different. Both are governed by the Indian Contract Act of 1872, and if you get them mixed up, it
could have serious effects. Let's look at some of the ways that a contingent contract is different
from a bet deal.”

 Nature
1. Contingent Contract –
The deal is binding if the conditions are met. Due to its nature as a conditional
agreement, a contingent contract's stipulations may occur either before or after the main
agreement's execution. A precedent may be established if the contract is conditional on
the occurrence of a future incident. “It is, on the other hand, subsequent if a previously
binding contract is used to determine whether or not an event happened.9”
“A contingent contract's obligations bind the parties to the following conditions each
party has the right to withdraw from the agreement before the event happens. 10 The main
obligations, on the other hand, have not arisen until the event happens, but the parties
cannot withdraw as long as the event has the possibility to happen.”11 Lastly, neither side
must take any action to prevent the event from happening.12
1. Wagering Agreement –

8
“Badridas Kothari v. Meghraj Kothari,” AIR 1967 Cal 25.
9
“Schweppe v Harper”, (2008) ECWA Civ 442.
10
“Pym v Campbell”, (1856) 6 E & B. 370.
11
“Smith v Butler,” (1900) 1 QB. 694.
12
“Mackay v Dick,” (1881) 6 App Cas 251.

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 Wagering deal is void. A wagering deal is a "quasi-contract" in which one party agrees
to pay the other party money if something uncertain happens in the future, and the other
party agrees to pay money if the uncertain thing doesn't happen. In India, on the other
hand, a bet is invalid and can't be enforced. This is okay because it goes against public
policy and good morals. If they were enforced, they would make people act more
criminally, so they aren't allowed to protect the values of society.
 Application
1. Contingent Contract –
The best way to understand contingent contracts is to look at how they are used in
business transactions.13 One important role is insurance contracts, which are based on
what might happen. Insurance is just an agreement between two or more people to do
something if something bad happens in the future. The person who makes the offer is
responsible for carrying out the agreement. “In all types of insurance, like fire insurance,
life insurance, car insurance, and so on, the offeror, which is basically an insurance
company, offers to take on the risk of the offeree in exchange for the offeree agreeing to
pay a set amount of premium/money to the firm.”14 “Every insurance policy must have an
insurable interest in order to be valid. An insurance contract would be nothing more than
a betting agreement without this, and it would be void. The risk of loss against which the
party is insured owing to the occurrence of an enforceable future event is referred to as
insurable interest.” In a wagering agreement, on the other hand, no party is at danger of
losing money except for the agreement itself.

2. Wagering Agreement –
In comparison to these contracts, any kind of betting would be a wagering deal. When
you bet, you use money to try to guess what will happen at an event, like a sports game.
In India, this is against the law, but it happens a lot in cricket, especially in the Indian
Premier League. (IPL). India's Public Gambling Act of 1867 says that betting is illegal,
but Section 30 of the ICA says that any plate, gift, or money worth more than 500 rupees
must be given to the winner of a horse race if a deal was made for it. In the same way,

13
Shaffer, Sherrill. "Production and Contingent Contracts,” (Journal of Post Keynesian Economics 6, 1984) 4, 634-
36, < http://www.jstor.org/stable/4537854> accessed may 11 2022.
14
“United India Insurance Co Ltd v Pushpalaya Printers,” (2004) 3 SCC 694: AIR 2004 SC 1700.

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 Section 30 of the ICA does not cover lotto wins. In India, it is against the law to bet on
anything else, and doing so can get you in trouble.

 Existence of future uncertain event

1. Contingent Contract –
The fulfilment of this agreement is contingent upon the occurrence of some future
incident. It makes no difference to the result of the contract.
2. Wagering Agreement –
The outcome of the wager depends solely on a hypothetical occurrence.

 Reciprocal promise:
1. Contingent Contract –
“There may or may not be reciprocal promises in a contingent contract.”
2. Wagering Agreement –
“Reciprocal promises” are involved in a wagering agreement.

 Interest of parties:
1. Contingent Contract –
Both the occurrence and non-occurrence of an event are of genuine concern to the
involved parties.
2. Wagering Agreement –
The only thing that matters to the participants in a wager is whether or not they come out
ahead.

CONCLUSION WITH SUGGESTIONS

The India Contract Act of 1872 sets rules for both contingent deals and bets. Act 1872 applies to
both of them in some ways, but when we look at their nature, scope, enforceability, and legality,
we can see that they are very different. “For example, contingent contracts are legal and can be
enforced by the government, but wagering contracts are not, with some exceptions like horse
races with winning prices of up to Rs. 500.” Prize for crossword problems that take both brains
and skill to solve. In short, there are several differences, even though there are some parallels.
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The Indian Contract Act of 1972 has a lot to do with them. To sum up, bet agreements have been
illegal since the beginning of time. However, making changes to make them legal, like those that
have been suggested, could help stop people from breaking the law and also make it easier to
handle these contracts. In this way, a bet deal would work the same as a contingent contract.
Long-term, it would give the government a lot more power to stop illegal and harmful things
from happening. Second, making it legal has the added benefit of bringing in more money,
which, in my opinion, is the best and most effective way to stop bettors from doing bad things
like trying to influence players and ruining the game.

REFERENCE:
1. Pollock & Mulla, The Indian Contract Act, vol 1 (16th Edn 2019).
2. Sweet and Maxwell, ‘Chitty on Contracts – Volume I General Principles’ 1 (2004).
3. Sheetal Kumar, ‘Nature of Contingent Contracts in India and how they differ from
Wagering Agreements’, (2020) 1(4).
4. Rajni, special types of contract-contingent and wagering contract, vol 4 (July 2014).
5. Nand Kishore Lalbagh vs New Era Fabrics Pvt Ltd.& Ors, AIR 2015 SC 3796.
6. Gian Chand Vs Gopala and Ors, 1995 SCC (2) 528.
7. Frost Vs Knight, (1872) L.R. 7 Ex. 111.
8. Sir William Anson, law of contracts, (27th edn, 1998).
9. Nikita Dutt, ‘The Concept of Wagering Agreements under the Indian Contract Act, 1872’
(2019) 6(3).
10. A.G. Guest, Anson’s principles of the English law of contract, (22nd edn, 1964) 301.
11. Jethmal Madanlal Jokotia v. Nevatia & Co, AIR 1962 Andh Pra 350.
12. Narayana Ayyangar v. Vallachami Ambalam, (1927) ILR 50 Mad 696 (FB).
13. Dayabhai Tribhovandas v Lakshmichand, (1885) ILR 9 Bom 358.
14. Gherulal Parakh v. Mahadeodas Maiya, 1959 AIR 781.

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