ASSIGNMENT 1: The distinction between Insurance contracts and wagers therefore focused on the relationship between the prospective

insured and the subject matter of the agreement. This division is well entrenched. The common law definitions of insurance and wagering make express reference to the presence or absence of interest in the subject matter. As per James Davey Discuss! According to Osborns concise law dictionary, a wager is a promise to give money or moneys worth upon the determination or ascertainment of an uncertain eventthe essence of gaming or wagering is that one party is to win and the other to lose upon a future event, which at the time of the contract is of an uncertain nature, that is to say, if the event turns out a certain way A is to lose but if it turns out the other way, A is to lose Wagering is therefore a form of betting and is competitive by nature, that is, one party to the agreement loses while the other wins. In the case of Carlill v Carbolic Smoke Ball Co., a wager was defined as; A wagering contract is one by which two persons, professing to hold opposite views touching the issue of a future uncertain event, mutually agree that, dependant on the determination of that event, one shall win from the other, and that other shall pay or hand over to him, a sum of money or other stake; neither of the parties having any other interest in that contract than the sum or stake he will so win or lose, there being no other consideration for making of such contract by either of the parties. If either of the parties may win but cannot lose, or may lose but cannot win, it is not a wagering contract.

On the other hand, Channell J, in Prudential Insurance Co. V Commissioners of Inland Revenue said two things were necessary to the formation of an insurance contract:
1.

It is an agreement in which for some consideration (usually called premiums) you secure to yourself some benefit upon the happening of some uncertain event.

2.

The event which is the subject matter of the insurance contract must involve some uncertainty either with the event ever happening or it happening at an uncertain time.

3.

It is necessary that at time of contracting the insured must have an insurable interest in the subject matter. That is, the insured would suffer actual loss (financial loss) were the event to happen.

The latter argument is in complete agreement with J. Darvey. Ultimately, the difference between a wager and a contract of insurance is the presence or absence of an insurable interest. Thus, Blackburn J in WILSON v JONES [1867] 2 LR EXCH 139 gave the following distinction: I apprehend that the distinction between a policy and wager is this: a policy is, properly speaking, a contract to indemnify the insured in respect of some interest which he has against the perils which he contemplates it will be liable In essence therefore, a contract of Insurance is a contract of indemnity. The insurer indemnifies the insured against loss of something of value that he possesses or

bears a continued responsibility for. The risk insured against is thus intrinsic to the subject matter of the insurance contract and the insured could not recover more than the actual loss suffered. The purpose for an insurance contract as far as the insured is concerned is to minimise or cover his losses if foreseeable calamities befell the subject matter. It is this subject matter which is the insurable interest. In wagering however, the risk is not intrinsic to the subject matter but only created by the agreement1. But for the agreement, there is no risk or possibility that A would suffer loss should the event happen or not. His interest in the event is not related to it except so far as the agreement on a sum or other benefit to be won or lost should the event happen in a particular manner. Nor is the event related to the agreement. The event exists or happens independent of the agreement1. There is, in other words, an absence of the insurable interest. Put differently, it can be said that in wagering, an investment is made which will recoup interest or be lost depending on the outcome of an agreed on event where as an Insurance Contract is not an act of investment but a safe haven or cover against loss of an investment. This is well illustrated in LEPPARD V EXCESS INSURANCE CO LTD [1979] 1 WLR 512 also reported [1979] 2 ALL ER 668; Mr Leppard owned a country cottage surrounded by fields. Mr Leppard decided to sell the cottage but a local farmer who owned all the land surrounding the property opposed the sale. Consequently the market value of the house fell from 8694 to 3000. There was a fire and the cottage was completely destroyed. The insurers paid 3000. The Judge stated as follows: This is an indemnity policy. It entitles Mr Leppard to the amount of his loss and no more. Accordingly, it seems to me that the amount to which he is entitled to in

respect of this fire is 3000 which is the agreed value of the cottage as it was immediately before the fire. That is all he is entitled to recover A wagering contract on the other hand is entered into for monies ( or other value) gain. An insurance contract seeks to recover money or other value. It is no wonder that wagering in the Casino Act; CAP 157(2) of the laws of Zambia is there defined as, staking any money or valuable thing While precedent is relied on for identification of a wagering contract in common law jurisdictions, enforcement of such contracts is not common. In India for example, wagering contracts are not enforceable though legal2. In the USA, some wagers are not only legal but enforceable. The great majority of common law jurisdictions have adopted gaming laws based on the UK Gaming Act 1845. Legislation in all Australian jurisdictions for example is based on S. 18 of the Gaming Act, which provides that the contracts by way of wagering and gaming are null and void.[xvii] The Gaming and Wagering laws of Malaysia, Singapore, Hong Kong and New Zealand are also modeled after the UK Gaming Act. Until the enactment of the Gaming Act, 1845, wagering contracts were not prohibited by law in England. But Section 18 of the Gaming Act, 1845 (UK) declared that all contracts or agreements by way of wager shall be null and void and that no suit shall be brought or maintained in any Court of law and equity for recovering any sum of money or valuable thing alleged to be won upon any wager. The law distinguishes bets which are and which are not wagers The Gaming Act 1845, s18 provides that contracts by way of wagering are void and unenforceable (as are gaming contracts) whilst other betting transactions are binding legal agreements. In practice betting conducted by bookmakers usually on horse and dog

races is usually wagering and pool betting by football pools and totalisators is not wagering. In Zambia, legal forms of betting or wagering are specifically provided for by statute. Such statutes include; The Betting Control Act, The Pools Act e.t.c.

REFERENCES
1.

J. Lowry and P. Rawlings, Insurance Law; Doctrinbe and Principles,Pg4 , 2nd Edition

2.

A. Rathore, Legalservicesindia.com: Wagering agreements: The Position of Law, 4/9/11.