Contract Void Agreementst I

Law of Contract-I

Void Agreements

Dr. Tabrez Ahmad,
1 http://corpolexindia.blogspot.in

Void Agreements
 Agreement of which the consideration or the object
is not lawful (Sec. 23 and 24)
 Agreement without consideration (Sec. 25)
 Agreement in restraint of marriage (Sec. 26)
 Agreement in restraint of trade (Sec. 27)
 Agreement in restraint of legal proceedings(Sec.28)
 Agreement which is ambiguous and uncertain (Sec.
29)
 Agreement by way of wager ( Sec. 30)
 Agreement to do an impossible act ( Sec. 56)

Dr. Tabrez Ahmad,

Agreement in restraint of trade void
Sec. 27 of the Indian Contract Act 1872

 Exceptions
– Sale of Goodwill
– Partnership Act, sec. 11, 36, 54
– Trade combination
– Restraints during employment
– Solus or exclusive dealing agreements

Gujarat Bottling Co. v Coca Cola Co.(1995) 5 SCC
545

Dr. Tabrez Ahmad,

Void agreements

Agreements in restraint
of legal proceedings
void

Dr. Tabrez Ahmad,

Agreements in restraint of legal
proceedings void

Sec. 28 of the Indian Contract Act 1872.
An agreement is void to the extent it restricts absolutely
a party from enforcing his contractual rights by usual
proceedings in ordinary courts; or if it limits the time
within which he may enforce his rights. It saves two
types of contracts: (a) those with a stipulation that an
arbitration award shall proceed a cause of action,
and (b) a contract to refer existing disputes to
arbitration.

Dr. Tabrez Ahmad,

Restraint of legal proceedings

No man can exclude himself from the protection of
courts by contract. The citizen has the right to have
his legal position determined by the ordinary
tribunals, except ,subject to contract (a) when there
is an arbitration clause which is valid and binding
under the law ; and (b) when parties to a contract
agree as to the jurisdiction to which dispute in
respect of the contract shall be discharged. The
section affirms the Common Law. Its provisions
appear to embody a general rule recognised in the
English Courts which prohibits all agreements
purporting to oust jurisdiction of the Courts.
Dr. Tabrez Ahmad,

Adsolute restriction

The sec. 28 does not apply where the
restriction is not absolute. Where one out of
two competent jurisdictions are excluded by
agreement, it does not amount to absolute of
ouster jurisdiction, and such a clause does
not violate sec. 28. ( ABC Laminart Pvt. Ltd.
V AP Agencies, Salem AIR 1989 SC 1239.)

Dr. Tabrez Ahmad,

26. Agreement in restraint
of marriage void.

 Every agreement in restraint of the marriage of any person,
other than a minor, is void.
COMMENTS
 The wide and unguarded language of this section is taken
from the draft Civil Code of New York (S. 8.36). It seems
probable that a contract limited to not marrying a certain
person or any one of a certain definite class of persons
would be held good. Apparently such agreements must be
held void in India. The Allahabad High Court expressed
doubt on the question whether partial or indirect restraint
on marriage was within the scope of S. 26.

Dr. Tabrez Ahmad,

 The Hindu law recognises polygamy, and as to
Muhammadan law a man may have as many as four wives
at a time subject to Family Laws restrictions. But neither
law binds a man to marry more than one wife. It would
seem, therefore, that a provision in a Kabinnamah by
which a Muhammadan husband authorises his wife to
divorce herself from him in the event of his marrying a
second wife is not void, and if the wife divorces herself
from the husband on his marrying a second wife, the
divorce is valid, and she is entitled to maintenance from
him for the period of iddat.

Dr. Tabrez Ahmad,

 There is a distinction between restraint on
marriage generally and a restraint on
remarriage; and a condition in a wakf that
if the widow of a co-sharer remarried she
should forfeit her right to the profits
under the wakf was accordingly upheld.

Dr. Tabrez Ahmad,

29. Agreements void for uncertainty.

 Agreements, the meaning of which is not certain, or capable of
being made certain, are void.
Illustration
 (a) A agrees to sell to B "a hundred tons of oil." There is
nothing whatever to show what kind of oil was intended. The
agreement is void for uncertainty.

 (b) A agrees to sell to B one hundred tons of oil of a specified
description, known as an article of commerce. There is no
uncertainty here to make the agreement void.

Dr. Tabrez Ahmad,

 (c) A, who is a dealer in coconut-oil only, agrees to sell to B "one
hundred tons of oil." The nature of A's trade affords an indication of the
meaning of the words, and A has entered into a contract for the sale of
one hundred tons of coconut-oil.
 (d) A agrees to sell to B "all the grain in my granary at Bhubaneswar.
"There is no uncertainty here to make the agreement void.
 (e) A agrees to sell to B "one thousand maunds of rice at a price to be
fixed by C." As the price is capable of being made certain, there is no
uncertainty here to make the agreement void.
 (f) A agrees to sell to B "my white horse for rupees five hundred or
rupees one thousand." There is nothing to show which of the two
prices was to be given. The agreement is void.

Dr. Tabrez Ahmad,

COMMENTS
 Ambiguous contracts.---The text and (with one addition) the illustrations of this
section follow the draft of the Indian Law Commissioners with only formal
variation. The Illustrations are plain, and sufficient to explain the meaning of the
section.
S. 93 of the Evidence Act provides that when the language of a document is
ambiguous or defective no evidence can be given to explain or amend the
document. Sec also Ss. 94-97 of the same Act. Neither will the Court undertake
to supply defects or remove ambiguities according to its own notions of what is
reasonable; for this would be not to enforce a contract made by the parties, but
to make a new contract for them. The only apparent exception to this principle
is that when goods are sold without naming a price, the bargain is understood
to be for a reasonable price. This was probably introduced in England on the
assumption that there was an ascertainable market price, and then extended to
all cases.

Dr. Tabrez Ahmad,

 Where the defendants, describing themselves as residents of a certain
place, executed a bond and hypothecated as security for the amount
"our property, with all the rights and interest", it was held that the
hypothecation was too indefinite to be acted upon. The mere fact that
the defendants describe themselves in the bond as residents of a
certain place is not enough to indicate their property in that place as
the property hypothecated. If they had described themselves as the
owners of certain property it would then have been reasonable to refer
the indefinite expression to the description. And where the defendant
passed a document to the Agra Savings Bank whereby he promised to
pay to the manager of the bank the sum of Rs. 10 on or before a
certain date "and a similar sum monthly every succeeding month," it
was held that the instrument could not be regarded as a promissory
note, as it was impossible from its language to say for what period it
was to subsist and what amount was to be paid under it.

Dr. Tabrez Ahmad,

 Similarly, where in an agreement for the sale of goods, the seller reserves the
right to vary the price at will, there is no contract. A compromise stating: "The
following five gentlemen shall decide all matters relating to our movable and
immovable property" was held to be too ambiguous to be enforced. An
agreement to grant a lease when no date of commencement is expressly or
impliedly fixed cannot be enforced. But when the commencement of a lease is
dependent upon a contingency, which has occurred, the agreement can be
enforced. An agreement to pay a certain amount after deductions as would be
agreed upon between the parties is void for uncertainty. It has also been held
that an agreement to refer an arbitration to a person, who has been described
in uncertain terms is void. But where the proprietor of an indigo factory
mortgaged to B all the indigo cakes that might be manufactured by the factory
from crops to be grown on lands of the factory from the date of the mortgage up
to the date of payment of tile mortgage debt, it was held that the terms of the
mortgage were not vague, and that the mortgage was not void in law. It has
been suggested that an agreement is too uncertain to be enforced if no limit to
the time of performance is expressed or can be inferred from the nature of the
case. This does not appear acceptable as a general proposition

Dr. Tabrez Ahmad,

 Void agreement, connotation of---Agreements
meaning whereof is not certain or capable of being
made certain, held, would be void---Where both
contracting parties are at consensus ad idem with
regard to essential terms of contract, any uncertainty
or vagueness which is incapable of being
ascertained, would have effect of vitiating contract---
In letter of guarantee there was no vagueness or
uncertainty, which could vitiate contract.

Dr. Tabrez Ahmad,

 Applicability---Agreement is void only when it is uncertain and
unascertainable---Agreement capable of being ascertained---Not
void. Under section 29 of the Contract Act, it is only when the meaning
of an agreement is not certain or capable of being made certain that
the agreement becomes void.
When, therefore, the sellers told the buyers that each shipment shall
be treated as if separate contracts were made for it and they shall be
bound to accept it even if this shipment was only in respect of a part of
the goods and the buyers agreed to this condition, the agreement is
not void as it is capable of being ascertained.

Dr. Tabrez Ahmad,

 Vague contract---When not enforceable. Section 29 is based
upon the principle that the contracting parties must be shown to
be at ad idem with reference to the essential terms of the
contract and, therefore, if there is any vagueness or uncertainty
incapable of being made certain the contract fails for
vagueness. For, in that case the parties cannot be said to
agree to the same thing in the same sense. Therefore merely
because the terms of the arbitration agreement are capable of
different and various interpretations it cannot ipso facto be
liable to be struck down as void. It can only be regarded as void
for uncertainty if its meaning is not certain or capable of being
made certain as provided by section 29.

Dr. Tabrez Ahmad,

 Terms of contract not ascertainable---Contract
void and enforceable. Held: The document being
incomplete, as its terms are not ascertainable with
reasonable certainty, it comes within the mischief of
section 29 and is void and by virtue of the provisions
of S. 21 (a) of the Specific Relief Act cannot be
enforced specifically.

Dr. Tabrez Ahmad,

30. Agreement by way of wager void.
 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.
Exception in favour of certain prizes for horse-racing. This section
shall not be deemed to render unlawful a subscription or contribution,
or agreement to subscribe or contribute, made or entered into for or
toward any plate, prize or sum of money, of the value or amount of five
hundred rupees or upwards to be awarded to the winner or winners of
any horse-race.
Section 294-A of the Indian Penal Code not affected. Nothing in
this section shall be deemed to legalise any transaction connected with
horse racing, to which the provisions of section 294-A of the Indian
Penal Code apply.

Dr. Tabrez Ahmad,

Wagering contract.---
 This section represents the whole law of wagering entracts now
in force.---There is no technical objection to the validity of a
wagering contract. It is an agreement by mutual promises, each
of them conditional on the happening or not happening of an
unknown event. So far as that goes, promises of this form will
support each other as well as any other reciprocal promises. It
would have been better if the Courts in England had refused,
on broad grounds of public policy, to admit actions on wagers;
but this did not occur to the Judges until such actions had
become common; and, until a remedy was provided by statute,
they could only find reasons of special public policy in special
cases, which they did with almost ludicrous ingenuity.

Dr. Tabrez Ahmad,


In a case of life insurance, Fulton J. said: "What is the meaning of the
phrase 'agreements by way of wager' in S. 30 of the Contract Act? ......
Can it be that the words mean something different in India from what
the corresponding words 'agreement by way of wagering' mean in
England? I do not see how such an argument can be maintained, or
how the fact that 14 Geo. III. C. 48 is not in force in India affects the
question.
A certain class of agreements such as bets, by common consent,
come within the expression 'agreements by way of wagers'. Others,
such as legitimate forms of life insurance, do not, though, looked at
from one point of view, they appear to come within the definition of
wagers. The distinction is doubtless rather subtle, and probably lies
more in the intention of the parties than in the form of the contract.

Dr. Tabrez Ahmad,

 There is no wager unless both parties run the risk of
loss and both parties have a chance of gain. Where
two wrestlers therefore agreed to a contest with a
stipulation that the wrestler who failed to appear
should forfeit Rs. 500 and that the winner, if the
contest took place, should receive a fixed sum out of
the gate-money, in a suit to recover the Rs. 500 the
defence of gaming and wagering failed

Dr. Tabrez Ahmad,

By way of wager"---
 There is no distinction between the expression "gaming and wagering," and the expression
"by way of wager," used in this section. The cases therefore bearing on the expression
used are still useful in construing the expression "by way of wager," used in the present
section.
Wagering contracts may assume a variety of forms, and a type with which the Courts
have, constantly dealt is that which provides for the payment of differences in stock
transactions, with or without colourable provisions for the completion of purchases. Such
provisions, if inserted, will not prevent the Court from examining the real nature of the
agreement as a whole. "In order to constitute a wagering contract neither party should
intend to perform the contract itself, but only to pay the differences". It is not sufficient if
the intention to gamble exists on the part of only one of the contracting parties. Contracts
are not wagering contracts unless it be the intention of both contracting parties at the time
of entering into the contracts under no circumstances to call for or give delivery from or to
each other. It is not necessary that such intention should be expressed. If the
circumstances are such as to warrant the legal inference that they never intended any
actual transfer of goods at all, but only to pay or receive money between one another
according as the market price of the goods should vary from the contract price at the given
time, that is not a commercial transaction, but a wager on the rise or fall of the market.

Dr. Tabrez Ahmad,

 On the other hand, the modus operandi may be such as to raise a
presumption against the existence of a common intention to wager.
This infrequently happens when agreements of a speculative character
are entered into through the medium of brokers, and when, according
to the practice of the market, the principals are not brought into contact
with each other, nor do they know the name of the person with whom
they are contracting, until after the bought and sold notes are
executed. Under circumstances such as these, when a party launches
his contract orders he does not know with whom the contracts would
be made. And this presumption is considerably strengthened when the
broker is authorised by the principal to contract with third persons in
his (the broker's) own name; for the third person may in such case
remain undisclosed even after the contract is made. But the
presumption may be rebutted by evidence of a common intention to
wager, though the contract has been brought about by a broker.

Dr. Tabrez Ahmad,

 The presumption against a wager was applied in a case where the transactions
were in Government paper to the extent of about half a crore of rupees, and the
plaintiff was both stockbroker and stockjobber, and the defendant was a
stockjobber. The magnitude of the transactions in the case was set up by the
defendant to support the contention that the transactions were by way of wager,
and reliance was placed on the Privy Council decision. But the contention was
overruled and the Court said: "In the Privy Council case the defendant was a
rice miller or a producer by trade, and. the wager related to quantities of rice
enormously out of proportion to his output and capital, deliverable at option
from a number of specified mills. Here there is, I think, sufficient proof that the
defendant was known in the market as the largest of jobbers, and the capital
available for the purchases which he bargained for was at least presumably to
be supplied by the constituents for whom a jobber is ordinarily supposed to be
acting."

Dr. Tabrez Ahmad,

Teji mandi transaction.---
 Teji mandi contracts were thus described; "It would appear that what
happens in a contract of this nature is that one party pays a premium
to the other party thus acquiring an option to buy and sell, as he
decides, a certain quantity of gold at a certain rate on a certain date.
Either on, or some date prior to, that date the put. chaser decides
whether he will buy or sell. According to his decision, communicated to
his broker, the broker enters into a contract with some third person in
order to meet the situation. On the due date the parties can either take
or give delivery of the stipulated quantity of gold or settle on the
difference." In a Bombay case Beaman J. held that these transactions
were by way of wager, and they were void under this section, and
adhered to this view in a later case. But at present time the
presumption is that a teji mandi is not a mere wagering transaction;
and this, it is submitted, is the correct rule.

Dr. Tabrez Ahmad,

Agreements between Pakka Adatia and
his constituents.---

 It was at one time held in some Bombay cases that a Pakka adatia was merely
the agent of his constituent, and that therefore no transaction between them
could be a wagering transaction. However, it was held on the
evidence of custom that as regards his constituent the pakka adatia was a
principal and not a disinterested middleman bringing two principals together.
Since that decision it has been held by the High Court of Bombay in two cases
that a transaction between a pakka adatia and his constituent may be by way of
wager like any other transaction between two contracting parties, and that the
existence of the pakki adat relationship does not of itself negative the possibility
of a contract being a wagering contract as between them. One of those cases
was taken to the Privy Council, and though the decree of the High Court of
Bombay was reversed, the Privy Council taking a different view of the facts, the
principle laid down by the Bombay High Court was affirmed by the tribunal. The
same view has been taken by the High Court of Allahabad, and the
East Punjab High Court.

Dr. Tabrez Ahmad,

 Agreement collateral to wagering contracts.---
Thus for our observations are confined to suits
between the principal parties to a contract. Different
considerations apply where the suit is brought by a
broker or an agent against his principal to recover his
brokerage or commission in respect of transactions
entered into by him as such, or for indemnity for
losses incurred by him in such transactions, on
behalf of his principal.

Dr. Tabrez Ahmad,

 There is no statute which declares agreements collateral to wagering
contracts to be void. Nor is there anything in the present section to
render such agreements void. It has accordingly been held that a
broker or an agent may Successfully maintain a suit against his
principal to recover his brokerage, commission, or the losses sustained
by .him, even though contracts in respect of which the claim is made
are contracts by way of wager. It does not follow because a wagering
contract is void that contracts collateral to it cannot be enforced. The
fact that a person has constituted another person his agent to enter
into and Conduct wagering transactions in the name of the latter, but
on behalf of the former (the principal) amounts to a request by the
principal to the agent to pay the amount of the losses, if any, on those
wageing transactions and if such payment is made, the agent is
entitled to recover the amount from him.

Dr. Tabrez Ahmad,

 Conversely, an agent who has received money on account of a
wagering contract is bound to restore the same to his principal.
A deposit made by one gambler with another, as security for
the observance of the terms of a wagering agreement, can be
recovered, unless the amount has in fact been appropriated for
the purpose for which it has been deposited. On the same
principle a suit will lie to recover a sum of money paid by the
plaintiff for the defendant and at his request, though such sum
represents the defendant's loss on a bet. Similarly money lent
for gaming purposes, or to enable the defendant to pay off a
gambling debt is recoverable. Such transactions are neither
against the provisions of the present section nor of S. 23.

Dr. Tabrez Ahmad,

 But the transaction in respect of which the brokerage,
commission, or losses are claimed must amount to a wagering
agreement, and it is no answer to a suit by a broker in respect
of such a claim against his principal that, so far as the
defendant was concerned, be entered into the contracts as
wagering transactions with the intention of paying the
differences only, and that the plaintiff must have known of the
inability of the defendant to complete the contracts by payment
and delivery, having regard to his position and means. It must,
further, be shown that the contracts which the plaintiff entered
into with third persons on behalf of the defendant were
wagering contracts as between the plaintiff and those third
persons.

Dr. Tabrez Ahmad,

 An agreement to settle differences arising out of a
nominal agreement for sale which was really a
gamble is no less void than the original wagering
transaction. The result therefore is that though an
agreement by way of wager is void, a contract
collateral to it or in respect of a wagering agreement
is not void.

Dr. Tabrez Ahmad,

 Speculative transactions.---Speculative transactions must be distinguished
from agreements by way of a wager. This distinction comes into prominence in
a class of cases where the contracts are entered into through brokers. The
modus operandi of the defendant in this class of cases is, when he enters into a
contract of purchase, to sell again the same quantity deliverable at the same
time in one or more contracts, either to the original vendor or to some one else,
so as either to secure the profit, or to ascertain the loss, before the vaida day;
and, when he enters into a contract of sale, to purchase the same quantity
before the vaida day. This mode of dealing, when the sale and purchase are to
and from the same person, has the effect, of course, of cancelling the
contracts, leaving only differences to be paid. When they are to different
persons, it puts the defendant in a position vicariously to perform his contracts.
This is, no doubt, a highly speculative mode of transacting business; but the
contracts arc not wagering contracts, unless it be the intention of both
contracting parties at the time of entering into the contracts, neither to call for
nor give delivery from or to each other.

Dr. Tabrez Ahmad,

 There is no law against speculation, as there is against gambling. It
may well be that the defendant is a speculator who never intended to
give delivery, and even that the plaintiffs did not expect him to deliver;
but that does not convert a contract, otherwise innocent, into a wager.
Speculation does not necessarily involve a contract by way of wager,
and to constitute such a contract a common intention to wager is
essential. It is in cases of the above description that there is a danger
of confounding speculation, or that which is properly described as
gambling, with agreements by way of wager; but the distinction in the
legal result is vital.
The Contract Act in section 30 provides that agreements by way of
wager are void; but that a transaction may fall within this provision of
the law there must be at least two parties, the agreement between
them must be by way of wager, and both sides must be parties to that
wager.

Dr. Tabrez Ahmad,

 Oral evidence of agreement being by way of wager.---Though an agreement in writing
may ostensibly be for the purchase and sale of goods deliverable on a certain day, oral
evidence is admissible to prove that the intention of the parties was only to pay the
difference, the burden of proof, of course, being on the party who alleges that it was a
wager. Such "intention" is a "fact" within the meaning of S. 3 of the Evidence Act (see cl. 1,
illustration (d), and it may be proved by oral evidence under S. 92, proviso 1, of the same
Act, as, if proved, it would invalidate the agreement under the provisions of the section
now under consideration. The same principle has been reiterated in some cases. Thus in
a Bombay case Jenkins C.J. said; "The law says that we must find, as best we can, the
true intention of the parties; we must not take them at their written word, but we must
probe among the surrounding circumstances to find out what they really meant.....We are
not, and we must not be, bound by the mere formal rectitude of the documents if in fact
there lurks behind them the common intention to wager, and parties cannot be allowed to
obtain from the Courts any sanction for their wagers merely because they use a form
which is not a true expression of their common purpose and intention. The surrounding
circumstances and the position of the parities and the history of dealings of this class are
legitimate, though not .exclusive, matters for our investigation into the true intention of the
parties."

Dr. Tabrez Ahmad,

 ." In a still later case Davar J. said: "What the Court has to do is not
simply to look at the transactions as they appear on the face of them,
but to go behind and beyond them, and ascertain the true nature of the
dealings between the parties by probing into surrounding
circumstances and minutely examining the position of the parties and
the general character of the business carried on by them." In this class
of suits it would be almost idle to expect to get at the truth unless the
Court takes the widest possible outlook consistent with the provisions
of the Contract Act; otherwise the result would be that the statute could
be violated with impunity by the simple and habitual device of cloaking
wagers in the guise of contracts. There can be no question of a wager,
if a substantial part of the goods has been delivered.

Dr. Tabrez Ahmad,

 To determine the general character of the plaintiff's business, the
Court ought to inquire how other contracts that may have been entered
into by the plaintiff with the same defendant, or even with third parties,
and relating to the goods in question, were previously performed by the
plaintiff, whether by payment of differences or by delivery of goods.
Thus where it appeared that at the vaida for which the contracts in
question had been made the plaintiff had neither given nor taken any
delivery of any cotton, it was held that the evidence tendered by the
plaintiff to show that at other vaidas he had given and taken delivery of
cotton was admissible, and that the lower Court was wrong in
excluding this evidence. Upon the same principle, evidence is
admissible to show that in the case of a particular class of contracts, or
of contracts relating to a particular commodity, the normal course of
dealing is to pay difference only.

Dr. Tabrez Ahmad,

 Promissory note for debt due on a wagering contract.---
Agreements by way of wager being void, no suit will lie on a
promissory note for a debt due on a wagering contract. Such a note
must be regarded "as made without consideration"; for "a contract
which is itself null and void cannot be treated as any consideration for
a promissory note."
Suit to recover deposit.---The prohibition contained in this section as
regards the recovery of money deposited pending the event of a bet
applies only to the case of winners. The winner of a wager or a bet
cannot sue to recover the amount deposited by the loser with the
stake-holder, but it is quite competent to the loser to recover back his
deposit before the stake-holder has paid it over to the winner. In case,
however, governed by the provisions of Bombay Act for Avoiding of
Wagers (Amendment) Act, 1865, even a loser cannot recover back the
deposit

Dr. Tabrez Ahmad,

Lotteries.---
 S. 294.A of the Indian Penal Code makes it penal to keep any office or place for the
purpose of drawing any lottery not authorised by Government or to publish any proposal to
pay any sum, or to deliver any goods, or to do or forbear doing anything for the benefit of
any person on any event or contingency relative or applicable to the drawing of any ticket,
lot, number, or figure in any such lottery.
Before the enactment of this section of the Code, lotteries not authorised by Government
were prohibited by the Private Lotteries Act, 1844. The Act declares all such lotteries
"common and public nuisances and against law." The Act was repealed by the Indian
Penal Code Amendment Act, 1870, and in its place S. 294-A was inserted in the Code
(see S. 10 of the amending Act).
Where a particular association was authorised by the Government by a letter to hold a
lottery, the effect was that no prosecution would lie under the criminal law. But a sale or
purchase of a ticket in such a lottery would still be a wagering contract under this section
as well as under the Bombay Act; for the Government could not by a letter overrule the
Central Act of the Acts of the Provincial Legislature.

Dr. Tabrez Ahmad,

 What is a Lottery?---"Lotteries ordinarily understood are games of
chance in which the event of either gain or loss of the absolute right to
a prize or prizes by the person concerned is made wholly dependent
upon the drawing or casting of lots, and the necessary effect of which
is to beget a spirit of speculation and gaming that is often productive of
serious evils." It was so stated in a Madras case where an agreement
was entered into between twenty persons whereby it was provided that
each should subscribe Rs. 200 by monthly installments of Rs. 10, and
that each in his turn, as determined by lot, should take the whole of the
subscriptions for one month. The defendant contributed Rs. 10 every
month for a period of ten months, and in the tenth month he got his lot
of Rs. 200. Thereupon a bond was taken from him by the plaintiff, who
was the agent in the business, for the remaining Rs. 100 in order to
ensure the furture regular payment of monthly installments for the
further period often months.

Dr. Tabrez Ahmad,

 In a suit upon the bond it was contended that the transaction was
illegal as being a lottery within the meaning of the Private Lotteries Act,
1844, and that the suit therefore could not be maintained. It was held
that the transaction did not amount to a lottery. The Court said: "Here
no such lottery appears to have taken place: It is not the case of a few
out of a number of subscribers obtaining prizes by lot. By the
arrangement all got a return of the amount of their contribution. It is
simply a loan of the common fund to each subscriber in turn, and
neither the right of the subscribers to the return of their contributions
nor to a loan of the fund is made a matter of risk or speculation. No
loss appears to be necessarily hazarded, nor any gain made a matter
of chance." A "chit fund" plan under which all subscribers are repaid
their capital by "a fixed date, though some determined by lot get more
and sooner, is not a lottery.

Dr. Tabrez Ahmad,

 Default by Bank---Recovery of security by Bank---
Relationship between respondent Bank and
appellant firm---One of agency---Respondent Bank
under obligation to present three bills of lading of
foreign Bank before a specified date alongwith Bill of
Exchange---Bill of Lading and Bill of Exchange being
most integrated parts of same transaction, failure to
present full set of bills of lading being immediate
cause of non-payment of Bill of Exchange,
respondent Bank, held, marred security and not
entitled to any decree on basis of bills of exchange
Dr. Tabrez Ahmad,

Wagering Contract---
 Such contracts are void---No suit for recovery of money
can be brought on such contract. A wagering contract is one
by which two persons mutually agree that on determination of a
future uncertain event one shall win from the other and the
other shall pay a sum of money, there being no other real
consideration for the making of such contract. In cases of such
contract the intention of the parties .is to be determined as a
question of fact. It is to be seen whether actual delivery of the
goods is contemplated or only the differences are required to
be paid. All contracts by way of gaming or wagering are void
and no action can be brought by the winner on a wager, either
against the loser or the stake-holder to recover what is alleged
to be won.

Dr. Tabrez Ahmad,

Thanks we will continue…..

Dr. Tabrez Ahmad,

What is a wager?---
 A wager has been defined as a contract by A to pay money to B, on
the happening of a given event, in consideration of B paying [this
should be "promising to pay"] to him money on the event not
happening. But Sir William Anson's definition, "a promise to give
money or money's worth upon the determination or ascertainment of
an uncertain event," is neater and more accurate. To constitute a
wager "the parties must contemplate the determination of the uncertain
event as the sole condition of their contract. One may thus distinguish
a genuine wager from a conditional promise or a guarantee": Anson,
Law of Contract, 17th ed. 221,222 (i). "But if one of the parties has the
event in his own hands, the transaction lacks an essential ingredient of
a wager". "It is of the essence of a wager that each side should stand
to win or lose according to the uncertain or unascertained event in
reference to which the chance or risk is taken."

Dr. Tabrez Ahmad,

Contract Void Agreementst I

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