Golden Research Thoughts
ISSN 2231-5063
ORIGINAL ARTICLE
Golden Research Thoughts
Rajni
Kalindi college ,
.
University of Delhi, Delhi
SPECIAL TYPES OF CONTRACT-CONTINGENT AND
WAGERING CONTRACT
Abstract:ACCORDING to the Oxford English Dictionary the word 'Law” means “rule made by authority for the proper
regulation of a community or society or for correct established habit and thought of mankind which has gained distinct and
formal recognition in the shape of uniform rules backed by the authority and power of the Government.” Broadly speaking
, the term 'Law” denotes rules and principles either enforced by an authority or self-imposed by the members of a society to
control and regulate people's behavior with a view to securing justice, peaceful living and social security.
Keywords:
Routing Protocols , Cloud Environment , n Internet Service provider .
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SPECIAL TYPES OF CONTRACT-CONTINGENT ANDWAGERING CONTRACT
INTRODUCTION :THE law of contracts is the foundation upon which the superstructure of modern business is built.
It is common knowledge that is business transactions quite often promises are made at one time and the
performance follows later. In such a situation if either of the parties were free to go back on its promise
without incurring any liability, there would be endless complications and it would be impossible to carry on
trade and commerce. Hence the law of contract was enacted which lays down the legal rules relating to
promise: their formation, their performance, and their enforceability. Explaining the object of the law of
contract Sir William Anson observes: “The law of contract is intended to ensure that what a man has been
led to expect shall come to pass; that what has been promised to him shall be performed”.
Besides, the law of contract furnishes the basis for the other branches of Business Law. The
enactments relating to sale of goods, negotiable instruments, insurance, partnership and insolvency are all
founded upon the general principles of contract law. That is why the study of the law of contract precedes
the study of all other sub-divisions of Business Law.
Objective of the study
1.To have the full understanding of these two special contracts.
2.To find out is there is any relationship between them.
3.To judge the legel implications and enforceability of the contracts under different laws.
METHODOLOGY
The information is collected through various journals books and articles. Thus secondary data is
normally used with current modification and knowledge.
THE INDIAN CONTRACT ACT, 1872
The law of contract in India is contained in the Indian Contract Act, 1872. It extends to the whole
of India except the State of Jammu and Kashmir and came into force on the first day of September 1872.
The Act is not exhaustive. It does not deal with all the branches of the law of contract. There are separate
Acts which deal with contracts relaing to negotiable instruments, transfer of property, sale of goods,
partnership, insurance, etc. Again the Act does not affect any usage or custom of trade (Sec. 1) A minor
amendment in Section 28 of the Act was made by the Indian Contract (Amendment) Act, 1996.
Scheme of the Act:- The scheme of the Act may be divided into two main groups.
General principles of the law of contract (Secs. 1-75).
Specific kinds of contract, viz.,
(a) Contract of Indemnity and Guarantee (Secs. 124-147).
(b) Contract of Bailment and Pledge (Secs. 148-181).
(c) Contracts of Agency (Secs. 182-238).
DEFINITION AND SCOPE OF BUSINESS LAW
The term 'Business Law' may be defined as that branch of law which comprise laws concerning
trade, industry and commerce. It is an ever growing branch of law with the changing circumstances of trade
and commerce. With the increasing complexities of the modern business world, the scope of Business Law
has enormously widened.
Section 31 defines a contingent contract as a contract to do or not to do something If some event,
collateral to such contract, does or does not happen.
For example: A contract to pay B Rs. 10000 if B's house was burnt. This is a contingent contract.
Contracts of insurance, indemnity and guarantee are contingent contract. Contingent contracts are called
conditional contracts under English Law.
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SPECIAL TYPES OF CONTRACT-CONTINGENT ANDWAGERING CONTRACT
ESSENTIAL ELEMENTS OF CONTINGENT CONTRACTS
The performance of a contingent contract will depend on a future event.
The happening of the event must be uncertain.
The happening or non-happening of such future event should not form an essential part of the contract but it
should only be collateral to it.
The happening or non-happening of such future event must be beyond the powers of the contracting parties.
.
RULES RELATING TO ENFORCEMENT OF ACT
RULE-1
Enforcement of contracts contingent on an event happening (Section 32)
Such contracts cannot be enforced by law unless and until that event has happened if the event
becomes impossible such contracts become void
Example
A makes a contract with B to buy B's horse if A survives C. This contract cannot be enforced by law
unless and until C, dies in As life-time.
A makes a contract with B to sell a horse to B at a specified price, if C, to whom the horse has been
offered, refused to buy him. The contract cannot be enforced by law unless and C refuses to buy the horse .
RULE 2
Contract Contingent on an event not happening(Section33)
Such contracts can be enforced when the happening of that event becomes impossible and not before.
Example
‘A’ promises to ‘B’ to publish his book if another publisher ‘C’ does not publish .C refuses. Now A
is liable to publish the book.
Rule3
Contracts contingent on future conduct of a living person (Section 34)
If the uncertain event is the future conduct of a living person, such event shall be considered impossible if
that such person does anything by which it becomes impossible to perform the contract within any definite
time.
Example
A agrees to pay B a sum of money, if B marries C. But C marries D. The marriage to C must now be
considered impossible, although it is possible that D may die and that C may afterwards marry B.
Rule4
Contracts contingent on happening of specified event within fixed time (Section 35)
Such contract become void if before the expiry of fixed time such event does not happen or becomes
impossible.
Example
A promises 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 the year, and becomes void if the ship is burnt within the year.
Rule5
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SPECIAL TYPES OF CONTRACT-CONTINGENT ANDWAGERING CONTRACT
Contracts contingent on specified event not happening within fixed time (Section 35)
Such contract can be enforced by law if before the expiry of fixed time such event does not happen
or it becomes certain that such event will not happen.
Example
A promises to pay B a sum of money if a certain ship does not return within a year. The contract
may be enforced if the ship does not return within the year or is burnt within the year.
Rule6
Agreements contingent on impossible event.(Section 36)
Such agreements are void whether the impossibility of the event is known or not to the parties to
the agreement at the time when it is made.
Example
A agrees to pay B Rs. 1,000 if B will marry A's daughter C and C was dead at the time of the agreement. The
agreement is void.
Wagering Agreement (Section30)
literally the word `wager’ means `a bet’ something stated to be lost or won on the result of a
doubtful issue, and, therefore, wagering agreement are nothing but ordinary betting agreements. Thus
where A and B pay A Rs.100 or where C and D enter into an agreement that on tossing up a coin ,if it falls
head upwards C will pay D Rs.50 and if it falls tail upwards D will pay Rs.50 to C, there is a wagering
agreement.
According to Sir William Anson, a wagering agreement, is a promise to give money or money’s
worth upon the determination or ascertainment of an uncertain event.
Thus, a wagering agreement is an agreement under which money or money’s is worth payable, by
one person to another on the happening or non-happening of a future uncertain event. There is no clear
meaning of the term ‘wager’ in Indian Contract Act 1872. Possibly the most expressive and allencompassing definition of a “Wagering agreement” was given by Hawkins, J., in Carlill vs Carbolic
Smoke Ball Co.(1892) “A wagering contract is one by which two persons professing to hold opposite views
touching the issue of a future uncertain event mutually agree that, dependent upon the determination of that
event , one shall win from the other, and the other shall pay or hand over to him, a sum of money or stake:
neither of the contracting parties having any other interest in that contract than the sum of stake he will so
won or lose, there being no other real consideration for making of such contract by either of the parties .It is
essential to a wagering contract that each party may under it either win or lose, whether he will win or lose
being dependent on the issue of the event, and therefore, remaining uncertain until that issue is known. If
either of the parties may win but cannot win, it is not a wagering contract”.
prepared solution kept with the Editor of a newspapers is a lottery and hence a wagering
transaction [State of Bombay vs. R.M.D. Chamarbaugwala].But a crossword puzzle is generally a game of
skill and intelligence and hence not a wager.
Essential element of Wagering Agreement:
There must be promise to pay money or money`s worth.
The promise must be conditional on an event happening or not happening.
The event must be uncertain one. If one of the parties has control over event, the transaction is not a wager.
There must be mutual chances of gain or loss. If either of the party may win but cannot lose, or may lose but
cannot win, it is not a wagering agreement.
Neither party should have control over the happening of event one way or the other.
No party should have a proprietary interest in the event. The stake must be the only interest which the parties
have in the agreement.
Examples of Transaction Held not Wagers(a) Prize competitions which are games of skill, e.g. picture puzzles, athletic competitions. For example, an
agreement to enter into a wrestling event in which winner was to be rewarded by the entire sale proceeds of
tickets, was held not be a wagering contract.
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SPECIAL TYPES OF CONTRACT-CONTINGENT ANDWAGERING CONTRACT
(b)According to the Prize Competition Act, 1955, prize competition in games of skill are not wagers
provided the prize money does not exceed Rs. 1,000.
(c) An agreement to contribute to a plate or prize of the value of above Rs. 500 to be awarded to winner of a
horse race.
(d)Contracts of insurance.
Example of Wagering Agreements:
An agreement to settle the difference between the contract price and market price of certain goods or shares
on a particular day.
A Lottery (Ie . a game of chance).But parties running a Government approved lottery cannot be prosecuted.
An agreement to buy a lottery ticket.
A crossword puzzle in which prizes dependent upon correspondence of the competitor `s solution with a
previously which are games of skills,e.g. picture puzzles, athletic competitions. For e.g. an agreement to
enter into a wrestling event in which winner was tobe rewardedby theentire sale p Wagering agreements
have been expressly declared to be void in India. No suit can 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,(Sec.30)
In India, unless the wager amounts to a lottery , which is a crime according to Section 294-A of the Indian
Penal Code, it is not illegal but simply void. Thus, except in case of lotteries, the collateral transactions
remain enforceable.
However , in Maharashtra and Gujarat , wagering agreements have been declared illegal.
Examples
In a wrestling bout, ‘A’ tells ‘B’ that wrestler no.1 will win. ‘B’ challenges the statement of ‘A’.
They bet with each other over the result of the bout ‘C’ & ‘D’ enter into an agreement that tossing up a on
coin if it falls head upwards ‘C’ will pay ‘D’ Rs. 50 otherwise ‘D’ will pay the ‘C’ with same amount .This is
a Wagering Agreement .Uncertain event Mutual chances of gain or loss Neither party has control over the
event ,No other interest in the event.
Basis
Agreement by way of wager, void. Section 30 lays down that “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 the result of any game or other uncertain event on which any wager is made.” Thus,
where A and B enter into an agreement which provides that if England’s cricket team wins the test match, A
will pay B Rs. 100,and if it loses B will pay Rs. 100 to A, nothing can be recovered by the winning party
under the agreement, it being a wager. Similarly, where C and D enter into a wagering agreement and each
deposit Rs. 100 with Z instructing him to pay or give the total sum to the winner, , no suit can be brought by
winner for recovering the best amount from Z, the stake-holder. Further, if Z had paid the sum to the winner,
the loser cannot bring a suit, for recovering his Rs. 100, either against the winner or against Z, the stakeholder, even if Z had paid after the loser’s definite instruction not to pay. Of course the loser can recover
back his deposit if he make the demand before the stake holder had paid it over to the winner(Ratanakalli vs
Vochalapu, 1928) . But even such a deposit cannot be recovered by a loser in states of Maharashtra and
Gujrat where such a agreement is void and illegal.
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SPECIAL TYPES OF CONTRACT-CONTINGENT ANDWAGERING CONTRACT
DISTINCITON BETWEEN A CONTINGENT CONTRACT AND A WAGERING AGREEMENT
Although wager is contingent agreement, yet there are certain points of difference between the two:
Contingent contract
1.A contingent contract has been defined as a contract to do or not to do something, if some event collateral
to such contract does or does not happen. A contingent contract is wider in scope.
2.A contingent contract thus includes a wager. In other words a wagering agreement is a contingent
agreement (contract)
3.In a contingent contract mutual promises are not necessary.
4.Example. A promise B to pay Rs. 1,000 if a ship does not return. Here A is making a promise to pay but B
is not making a similar promise to pay A. thus there is no mutuality of promises in a contingent contract.
5.In a contingent contract there is an independent interest. Example. A gets his house insured. It is a
contingent contract as A has independent interest in this case.
6.In a contingent contract determination of an uncertain event is not the sole condition.
7.A contingent contract is valid.
Wagering Agreement
1.A wager is a promise to pay money or money’s worth on the happening or non-happening of an uncertain
event.
2.A contingent contract need not necessarily be a wager. Thus we can say necessarily be a wager. Thus we
can say that all wagering agreements are contingent but all contingent contracts are not wager.
3.In case of a wagering agreement promise must be mutual.
4.Example. In wagering agreement A agrees to pay B 20 rupees if it rains on Monday and if it does not rain B
will pay 20 rupees to A. In the above example there is mutuality of agreement but this mutuality of promises
is not necessary in case of a contingent contract.
5.In a wagering agreement there is no independent interest apart from the money to be won or lost.
6.Example. A promises to pay Rs. 100 to B if it rains on Monday. It is a wagering agreement as A has no
independent interest.
7.In a wagering agreement determination of an uncertain event is the main condition of the contract.
A wagering agreement is voild/illegal
www.preservearticles.com/20120
CONCLUSION:Although both (contingent & wagering agreement are under India contract Act 1872. Some
common provision of Act 1872 also applies to them also but when we analyze them in depth by comparing
their nature, scope, enforceability and validity they appear to be very different like contingent contract are
valid and enforceable by law, where as the contract of wagering is not enforceable subject to certain
exception-agreement like horse race, wining price upto Rs. 500. Prize relating to cross word puzzles which
includes mind & skill. In short inspite of some similarities but which various dissimilarities. They form
very important provision/art of Indian contract Act 1972.
REFERENCES
1.Kuchhal MC, Kuchhal Vivek Business Law Vikas publication Third Edition.
2.Tulsian PC Business Law The McGraw-Hill Companies 2011.
3.Brett, Jeanne M. Negotiating Globally: How to Negotiate Deals, Resolve Disputes, and Make Decisions
Across Cultural Boundaries. John Wiley & Sons, 2007, p. 74.
4.Krutzberg, Terri. Naquin, Charles. The Essentials of Job Negotiations: Proven Strategies for Getting
What You Want. ABC-CLIO, 2011 p. 86-87.
5.Malhotra, Deepak. Bazerman, Max. Negotiation Genius: How to Overcome Obstacles and Achieve
Brilliant Results at the Bargaining Table and Beyond. Random House Digital, Inc, 2008, p. 69-71.
6.Sharma, Ashok. Business Regulatory Framework. V.K. Enterprises, 2006, p. 87.
7.Thompson, Leigh. The Truth About Negotiations. FT Press, 2012, p. 122-124.
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