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Two people with no interest in the weather agree that one will pay ₹100 if it rains on Monday and the other will pay ₹100 if it does not. How does the Indian Contract Act, 1872 treat the arrangement?

Question and options

Two people with no interest in the weather agree that one will pay ₹100 if it rains on Monday and the other will pay ₹100 if it does not. How does the Indian Contract Act, 1872 treat the arrangement?

  1. As a contract of indemnity under Section 124

  2. As a contingent contract, enforceable once the event happens

  3. As a contract of insurance against the risk of rain

  4. As a wager, void under Section 30

Answer and explanation

Correct answer: D - As a wager, void under Section 30

Each party may win or lose on an uncertain event in which neither has any interest apart from the stake, so the arrangement is a wager, void under Section 30 of the Indian Contract Act, 1872. A contingent contract under Section 31 depends on an event collateral to a real bargain, while indemnity and insurance require a loss or interest to protect.

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