The Deal With Wagering Agreements And Contingent Contracts

Coverage of this Article

KEY TAKEAWAYS

-The term wager refers to betting in its most basic sense. Section 30 of the Indian Contract Act expressly states that wagering agreements are void.

INTRODUCTION

-An agreement is a promise or arrangement made between two or more people to accomplish a common goal.

WAGERING AGREEMENT

-A wagering contract is one in which there are two necessary parties between which the contract has been made and in which the first party promises to pay a certain sum of money to the second party if a specific event occurs in the future and the second party agrees to pay to the first party if that particular event does not occur.

CONTINGENT CONTRACT

-The word contingent means when an event or situation is contingent, i.e. it depends on some other event or fact. For example, making money is contingent or depends on finding a good-paying job.

RELATED CASE LAWS

-The Madras High Court has called for stricter regulations for online games in D Siluvai Venance v. State Crl.OP. (MD) No. 6568 of 2020 & Crl.MP.(MD) No. 3340 of 2020.

CONCLUSION

-Section 30 of the Indian Contract Act of 1872 states that wagering agreements are void.

KEY TAKEAWAYS

• According to Section 2(h) of the Indian Contract Act, a contract is an agreement that is legally binding. In other words, a contract is a piece of paper signed by two parties that is legally binding.
• The term wager refers to betting in its most basic sense. Section 30 of the Indian Contract Act expressly states that wagering agreements are void.
• Contingent contracts are those in which the promisor only performs his obligation if certain conditions are met. The term "Contingent Contract" is defined in Section 31 of the Indian Contract Act of 1872.

INTRODUCTION

An agreement is a promise or arrangement made between two or more people to accomplish a common goal. The term "agreement" denotes that the accomplishment is solely dependent on the parties' free will. In other words, an agreement can be defined as any arrangement about something between two or more parties with a common goal in mind. An agreement is a non-binding agreement with no legal ramifications.

A contract is a legally binding agreement between two or more parties that creates a mutual obligation.

A contract, according to its definition, elevates an agreement to a new level by establishing specific rules and boundaries that are legally binding. Signing a contract obligates you to follow its terms; otherwise, you will face legal consequences.

All contracts in India are governed by the Indian Contract Act of 1872. This law ensures that a contract is well-regulated and legal.

According to Section 2(h) of the Act, a contract is an agreement that is legally binding. In other words, a contract is a piece of paper signed by two parties that is legally binding.

Section 10 of the Act specifies the conditions that must be met in order for a contract to be valid and legal.

The primary distinction between a contract and an agreement is that a contract is legally binding, whereas an agreement is not. A contract contains specific terms and regulations that can be enforced by law, whereas an agreement requires only that all parties understand their rights and responsibilities.

WAGERING AGREEMENT

A wagering contract is one in which there are two necessary parties between which the contract has been made and in which the first party promises to pay a certain sum of money to the second party if a specific event occurs in the future and the second party agrees to pay to the first party if that particular event does not occur. The presence of two parties who are of sound mind to profit or loss is the basic fundamental of a wagering agreement.

A wager is a bet or a gamble in layman's terms. In its most basic form, the term wager refers to betting.

Wagering Agreements or Wagers are agreements entered into between parties under the condition that money is payable by the first party to the second party if a future uncertain event occurs, and the second party to the first party if the event does not occur. In a wagering agreement, there should be a mutual chance of profit and loss. In general, wagering contracts are null and void.

Parties to a wagering contract mutually agree on the nature of the agreement that either party will win. Each party has an equal chance of winning or losing the bet. The possibility of profit or the risk of loss is not one-sided. It is a wagering contract if either of the parties can win but cannot lose or can lose but cannot win.

The essence of a wagering contract is that neither party has any interest in the contract other than the sum that he will win or lose. The profit or loss earned by the parties to a wagering contract is their primary concern.

Wagering agreements are expressly prohibited by Section 30 of the Indian Contract Act.

CONTINGENT CONTRACT

The word contingent means when an event or situation is contingent, i.e. it depends on some other event or fact. For example, making money is contingent or depends on finding a good-paying job.

Now, the ‘contingent contract’ means enforceability of that contract is directly dependent upon the happening or not happening of an event.

• The term "Contingent Contract" is defined in Section 31 of the Indian Contract Act of 1872 as follows:

'A contingent contract is a contract to do or not do something based on whether or not some event collateral to such contract occurs or does not occur.'

• In layman's terms, contingent contracts are those in which the promisor only performs his obligation if certain conditions are met. Insurance, indemnity, and guarantee contracts are examples of contingent contracts.
• A contingent contract is used in everyday life to describe contracts in which a promise is conditional on the occurrence or non-occurrence of some uncertain future event, and the contract must perform. As a result, it aids in the performance of actions required in insurance, guarantee, or negotiation. However, this type of contract cannot be used in standard contracts.

RELATED CASE LAWS

The Madras High Court has called for stricter regulations for online games in D Siluvai Venance v. State Crl.OP. (MD) No. 6568 of 2020 & Crl.MP.(MD) No. 3340 of 2020. The Court expressed concern by pointing out how young people are drawn to play such online games with monetary prizes. In addition, the Madras High Court issued a notice to MPL ambassador Virat Kohli and My 11Circle ambassador Sourav Ganguly for promoting online gaming apps. It is worth noting that the apps mentioned above include not only fantasy sports but also online rummy, which was a major point of contention in the Siluvai case.

When the savings and exceptions for 'game of skill' from the provisions of the Andhra Pradesh Act were removed, Andhra Pradesh became the latest state to outright ban fantasy sports.

Horse Racing is an exception to Wagering Contracts because the Supreme Court of India recognized that horse racing, football, chess, rummy, golf, and baseball are games of skill in the case of Dr. KR Lakshmanan v. State of Tamil Nadu AIR 1996 SC 1153. It went on to say that betting on horse racing was a game of skill because it required judging the horse's and jockey's form, as well as the nature of the race, among other things.

The legality of Dream 11 was challenged again in the Bombay High Court in the case of Gurdeep Singh Sachar v. Union of India SLP (Crl.) Diary No. 42282 of 2019, in which the Court upheld the previous judgment and stated: "The participants do not bet on the outcome of the match and merely play a role akin to that of selectors in selecting the team." The participants score points for the entire duration of the match, not just for a portion of it. The Bombay High Court conducted an interesting analysis that bolstered Dream 11's case.

Dream 11 was given the benefit of the doubt once more in 2020 when the Rajasthan High Court dismissed the PIL in Chandresh Sankhla v. The State of Rajasthan and Ors. (2020) 2 RLW 1601,( which claimed that the app was involved in cricket betting.

In Gian Chand Vs Gopala and Ors 1995 SCC (2) 528, JT 1995 (2) 513, there was an agreement to sell the land that stated that the earnest money would be returned if the land was notified for acquisition. Unbeknownst to the parties, the land had already been notified. On declaration under Section 6 of the Land Acquisition Act, the contract became impossible to perform and thus void.

In Chandulal Harjivandas v. CIT 1967 AIR 816, 1967 SCR (1) 921 it was held that all contracts of insurance and indemnity are contingent.

In Nandkishore Lalbagh vs New Era Fabrics Pvt.Ltd.& Ors. (2015) 9 SCC 755, AIR 2015 SC 3796, a contract for the sale of land to a factory was to be carried out only if the labor unions agreed to the sale and the change of land use was approved by the appropriate authority. None of these contingencies could be met because neither the labor union nor the relevant authority had given their approval. As a result, the contract could not be enforced against the seller.

CONCLUSION

Section 30 of the Indian Contract Act of 1872 states that wagering agreements are void.

Furthermore, the Contract Act does not define a wager or a wagering agreement. It only states that such agreements are void and unenforceable and that no action can be taken to recover anything owed under a wager or to perform a contract in the nature of a wager. A wager is similar to a contingent contract, but it is not enforceable under Section 30.

As a result, the Contract Act should include an express definition of what constitutes a wager, removing any ambiguity about the legality of derivative contracts that are in the nature of wagering agreements.

Also, based on the in-depth analysis of various cases, books, and perspectives of learned scholars in this project, it can be stated that Section 30 of the Indian Contract Act of 1872 needs to be critically reviewed.

As a result, Section 30 should be amended to define the term wager. Since the judiciary has encountered a great deal of difficulty and ambiguity in dealing with the issue of wagers, specifically as to what all constitutes wagers and what all falls under the ambit of wagers.

The scope of wagers is defined differently by different jurists and in different judgments. In other words, the scope of Section 30 should be expanded.