An agreement between two persons under which money or money’s worth is payable by one person to another on the happen or non happening of a future uncertain event is called a wagering agreement.
– X promise to pay Rs. 1000 to Y if it is rained on a particular day, and Y promise to pay Rs.1000 to X if it did not.
– Wagering agreement is promise to give money or money’s worth upon the determination of uncertain event.- Sir Willian Anson.
Essential elements of wagering agreements:
(1) The must be a promise to pay money or money’s worth
(2) Performance of a promise must depend upon determination of uncertain event. It might have already happened but the parties are not aware about it.
(3) Mutual chancels of Gains or Loss.
(4) Neither party to have control over the events
(5) Neither party should have any other interest in event.
(6) One party is to win and one party is to lose.
Ex. 1:- Agreement to settle the difference between the contract price and market price of certain goods or shares on a particular day.
Ex. 2: A lottery is wagering agreement. Therefore, an agreement to buy and sell lottery tickets is a wagering agreement. Section 294 – A of the Indian Penal Code declares that drawing of lottery is an offence. However, the government may authorize lotteries. The persons authorized to conduct lotteries are exempt from the punishment. But, the lotteries still remain a wagering transaction.
Ex. 3: However, if the crossword puzzle prizes depend upon sameness of the competitor’s solution with a previously prepared solution kept with the organizer or newspaper editor, is a lottery and, therefore, a wagering transaction.
Ex. 4: However, when any transaction in any commodity or in shares with an intention of paying or getting difference in price, the agreement is a wager.