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CMA Foundation · Fundamentals of Business Laws and Business Communication · Void and Voidable Agreements, No Consideration No Contract

Arjun and Kabir agree that Arjun will pay Kabir Rs. 5,000 if a particular cricket team loses its next match, and Kabir will pay Arjun Rs. 5,000 if it wins. Which statement is correct under the Indian Contract Act, 1872?

It is a void wager. Section 30 declares agreements by way of wager void and forbids any suit to recover what is alleged to be won. Section 10 excludes agreements expressly declared void, so mutual promises do not make it a contract and the winner cannot sue.

  1. AIt is a valid contract because both promises are mutual
  2. BIt is a voidable contract at the option of the loser
  3. CIt is a contingent contract enforceable by the winner
  4. DIt is a void wager, and no suit can recover the amount wonCorrect

Explanation

Section 30 declares agreements by way of wager void and bars suits to recover anything alleged to be won on a wager. Since Section 10 excludes agreements expressly declared void, this is not a contract. Mutual promises do not save it, so the first option fails.

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