Question

Assertion (A): Collateral transactions to wagering are valid.
Reason (R): Only wagering agreements are declared void under Section 30 of the Indian Contract Act.

• A. (A) is true, but (R) is false.
• B. (A) is false, but (R) is true.
• C. Both (A) and (R) are true, but (R) is not the correct explanation of (A).
• D. Both (A) and (R) are true, and (R) is the correct explanation of (A).

Hint:

Remember: A "void" contract is unenforceable but not forbidden, while an "illegal" contract is prohibited by law and renders even collateral transactions void. Wagering agreements under Section 30 are only void, not illegal.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept.
Under Section 30 of the Indian Contract Act, 1872, wagering agreements are void, meaning they are unenforceable by law. However, they are not declared illegal (except in states like Maharashtra and Gujarat where local laws make them illegal). This distinction between "void" and "illegal" is crucial.

Step 2: Detailed Explanation.
Because wagering agreements are void but not illegal, collateral transactions — i.e., agreements that are indirectly connected to the wagering contract — remain valid and enforceable. For instance, a person borrowing money to pay a gambling debt can still be sued for repayment since the loan agreement is collateral and not a wagering contract itself.
Thus, both Assertion (A) and Reason (R) are true. The Reason correctly explains why collateral transactions are valid — because Section 30 declares wagering agreements merely void, not illegal.
Step 3: Final Answer.
Both Assertion (A) and Reason (R) are true, and (R) correctly explains (A). Hence, the correct option is (D).