Question

The following question consists of two statements, one labelled as. 'Assertion' and the other as 'Reason'. Read both the statements carefully and answer using the codes given below.

Assertion (A): The parties to the contract must be competent to contract otherwise it will be a void contract.
Reason (R): All wagering agreements are void.

Options

• Both A and R are true and R is the correct explanation of A

• Both A and R are true but R is not the true explanation of A

• A is true but R is false

• A is false but R is true

Answer 1

Both A and R are true but R is not the true explanation of A

Explanation:

Both A and R are true but R is not the true explanation of A. Essential of a Contract under the Indian Contract Act is that the parties participating in the Contract must competent to enter in the contract, i.e., they must have attained the age of majority (ii) should be of sound mind (iii) should be qualified for entering into a contract by any law to which he is subject. Law prohibits (a) minors (b) persons of unsound mind (c) persons who are otherwise disqualified like an alien enemy, insolvents, convents, etc. Wagering agreements are (Rajshree Sugars &Chemicals Limited v Axis Bank Limited) nothing but ordinary betting agreements. Section 30 of the Indian Contract Act states that "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." Incompetent persons as mentioned in the essentials are not competent to enter into a contract while a wagering agreement is a void agreement and not a contract.