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Transactions not regarded as wager

  • The transactions for sale and purchase of stocks and shares or for sale and delivery of goods, with a clear intention to give and take delivery are not wagers. But if the intention of the parties is to settle the price difference, it is a wager and hence void
  • Prize competitions which are a game of skill are valid
  • An agreement to contribute a sum of ₹ 500 or above to the winner of a horse race is a valid agreement
  • Contracts of insurance
  • Games of skill which requires the participant to exercise significant amount of knowledge and prudence are not regarded as wager.
  • Chit Fund

Adarsh is the owner of a house. He insures his house against loss by fire with SS & Co., an insurance company. According to the terms of the insurance policy, Adarsh has to pay ₹ 100 per annum as the premium. In case the house is destroyed by fire, the insurance company will pay the actual amount of loss suffered by him. This is not a wagering agreement, as Adarsh has interest in his own house which he wants to protect by insuring it. Moreover, on the happening of the event (i.e. fire) Adarsh will not gain anything. He will merely be indemnified for the loss suffered by him on the happening of the event. It is a contract of insurance, and is valid.

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