Multiple choice

A agrees to pay B Rs. 500/- if a particular ship does not return to the port. The ship was sunk. The contract

  1. can be enforced by B

  2. cannot be enforced by B

  3. is a wagering contract

  4. is unlawful, illegal and against public policy

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is NOT a wagering contract but a valid contract of indemnity/insurance. In wagering contracts, both parties have an interest in the event happening or not happening. Here, only A has an insurable interest - A suffers financial loss if the ship doesn't return (likely has cargo on it). This is a contingent contract indemnifying against a real risk, not a speculative bet. The contract can be enforced as it's based on valid insurable interest, not gambling.