12 February 2024

Daily practice questions for CLAT - (12 February 2024)



Wagering agreement is not defined in the Indian Contract Act of 1860. Cotton, L.J. in Thacker v Hardy said: “The essence of wagering and gaming is that one party is to win, and other is to fall upon an upcoming event, which at the time of the contract is of an uncertain nature, i.e., if the future event sets out one way A will lose, but if it turns out another way, he will win.” The most essential element of a wagering agreement is the uncertainty of the future event. The parties must not be familiar with the result of the uncertain event. The requirement herein is that the parties must not have any idea about the result even if the event has been held in the past. This means the future event is not essential rather the parties must not be aware of the result. In the case of Jethmal Madanlal Jokotia v Nevatia & Co, the parties must not be aware of the happening of the event or even if the event has happened in the past. The wager is based on chance. And therefore both parties must get an equal chance of winning, and mutual opportunity must be given to both parties to gain or lose. Agreements in which the results are determined towards one party then it is not a wagering agreement. There must be two outcomes of the event then only a fair chance will be given to the parties. If winning or losing is completely based on skill, there is no wager. In Baba sahib V, In this case, it was held that an agreement cannot be looked upon as a wagering agreement if it lacks the desire of winning or losing. The essence of the wager is that both parties must stand to win or lose to the result of an uncertain event. The parties to the agreement must only be focused on the outcome on which they have staked their money. The parties must not have any other interest in the event other than winning or losing. So the sole purpose must be betting. An insurable interest in the contract will not be called a wagering contract. There must be the absence of any kind of consideration from the parties to make it a wagering agreement. Neither of the parties shall have any control over the happening of the event in one way or any other. If one of the parties gets the hold of the event, this will hamper the essential element of water that is chance.

Question1:- K is a property dealer and insures his house with Safety Insurance and pays Rs. 800 per month as per the terms of the contract. If the house is destroyed by fire, Safety Insurance will pay Rs 80,000 to K. Decide?
  • A. This is not a wagering agreement because K is paying a consideration.
  • B. This is not a wagering agreement because it requires skill.
  • C. This is not a wagering agreement because K’s interest in the house is not limited to winning or losing.
  • D. This is a wagering agreement because it is based on an uncertain event.
Answer is C is correct. For a contract to be a wagering contract then either party should not have any interest in the agreement other than winning or losing. Hence, C is the correct option.
Question2:- M and S are teammates on the OPL Sponsor Quick 11, in the process M argues that he is better skilled at the process than S; to prove their claims; they engage themselves in a stake of Rs. 5,000. Decide?
  • A. This is not a wagering agreement because both of them are paying considerations.
  • B. This is not a wagering agreement because it requires skill.
  • C. This is not a wagering agreement because they have interests in the transaction, which is not limited to winning or losing.
  • D. This is a wagering agreement because it is based on an uncertain event.
Answer is B is correct. : The question mentions that they entered in this agreement to prove their skill; an agreement that requires skill cannot be a wagering contract. Hence, B is the correct option.
Question3:- K and S work for a production house for 10 years; K loves R and wants her to be in the cast of the next movie; therefore, he tells S to resign from the movie; if she does so, he would pay her twenty lakhs of rupees, while S tells that she would pay K twenty lakhs rupees if she does not resign from the job?
  • A. This is not a wagering agreement because both of them are paying considerations.
  • B. This is not a wagering agreement because it requires skill.
  • C. This is not a wagering agreement because the event can be controlled by one of the parties.
  • D. This is a wagering agreement because it is based on an uncertain event.
Answer is C is correct. This is not a wagering agreement because the event can be controlled by one of the parties. Agreements in which the results are determined towards one party then it is not a wagering agreement. Hence, C is the correct option.
Question4:- R enters into an agreement with D during an OPL match; which is a wagering agreement. R runs out of cash at that time, so he borrows money from his friend N before the match and tells him that he is betting on the KCB; he assures him that his winning or losing will not decide the repayment of the loan that he has taken from N. R loses the bet and tells N that because he lost the bet, the money he borrowed from N has gone and cannot be recovered. Decide?
  • A. R is right in his claim, and this is because the loan was collateral to the wagering agreement, and anything collateral to a void agreement is also void.
  • B. R has to pay back the money to N as the agreement collateral to the wagering agreement is valid.
  • C. R cannot claim the money as the agreement in itself was void as it was a wagering agreement.
  • D. None of the above
Answer is B is correct. R has to pay back the money to N as he had taken it as a loan, and a loan agreement is valid even if it is collateral to a wagering agreement. Hence, B is the correct option.