If you are stuck in such a situation, here is what to do.

Mr. Akash and his close friend, Mr. Varun, both fitness enthusiasts from the city of Nagpur, decided to add a competitive edge to their friendship. They agreed to hold an arm-wrestling competition on November 20th, 2024. To make it more interesting, they decided that the winner would receive a prize of ₹25,000 from the loser. While the challenge was entirely in good spirits, they became curious about the legal formalities of such an agreement. They wanted to create a formal, legally enforceable document, partly for the fun of it and partly to understand how contracts work in India. They wondered what such a document would be called, what it should contain, and what the process would be to make it official.

Advice in such cases

Entering into a formal agreement for a friendly challenge is possible under Indian law. However, its legal enforceability depends on whether the activity is classified as a game of skill or a game of chance. Agreements based on games of chance (wagering agreements) are generally void, but contests based on skill are often enforceable.

• Draft a Clear Agreement: The first step is to draft a clear and unambiguous agreement. This document is typically called a “Memorandum of Understanding” (MoU) or a simple “Agreement.”
• Specify the Terms: The agreement must detail all terms and conditions, including the names of the participants, the nature of the challenge (e.g., arm-wrestling), the date, time, and location of the event, the prize money, and the specific rules that will determine the winner.
• Include Witness Signatures: For added validity, the agreement should be signed by both parties in the presence of at least two witnesses, who should also sign the document.
• Use Stamp Paper: To make the agreement admissible as evidence in court, it should be executed on non-judicial stamp paper of the appropriate value as prescribed by the state’s stamp act.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

The primary law governing such agreements is the Indian Contract Act, 1872.

• Section 10 of the Indian Contract Act, 1872: This section outlines the essentials of a valid contract. For an agreement to be a contract, it must be made by the free consent of competent parties for a lawful consideration and with a lawful object, and not be expressly declared void. A friendly challenge for a prize based on skill generally meets these criteria.
• Section 30 of the Indian Contract Act, 1872: This section declares “agreements by way of wager” as void and unenforceable. A wager is a bet on an uncertain event where the outcome depends purely on chance. However, the Supreme Court has distinguished between games of skill and games of chance. A strength challenge like arm-wrestling is considered a game of skill, not chance. Therefore, an agreement related to it is not a wagering agreement and can be legally enforceable.

If you are the complainant

If you are the winner of the challenge and the other party refuses to pay the prize money as agreed, you are the complainant. Here are the steps you can take:

• Send a Legal Notice: The first step is to have a lawyer send a formal Legal Notice to the defaulting party. The notice will state the terms of the agreement, declare that they have breached it by not paying, and demand the payment of the prize money within a specified period (e.g., 15 or 30 days).
• File a Civil Suit: If the other party fails to comply with the legal notice, you can file a civil suit for recovery of money in the appropriate civil court. The stamped and signed agreement will be the primary piece of evidence in your case.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

In this scenario, the “victim” is the person who won the challenge but has not received the promised prize money. Your primary recourse is through the civil justice system to enforce the terms of your agreement.

• Preserve all Evidence: Keep the original agreement, any messages, emails, or recordings related to the challenge, and any proof that the event took place and you were the winner.
• Document the Breach: Note the date and time when the payment was due and when you requested it. Any refusal to pay should be documented if possible (e.g., via a text message or email).
• Initiate Legal Action: You cannot force the other person to pay without a court order. The legal process, starting with a legal notice, is the proper channel to seek remedy.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

The police have no role in such matters. This is a civil dispute arising from a breach of contract, not a criminal offense. If you approach the police, they will not file an FIR (First Information Report). They will rightly advise you that it is a civil matter and that you should approach a civil court for resolution. Police intervention is reserved for criminal activities, and failure to honor a private agreement does not fall into that category.

FAQs people normally have

• Is a verbal agreement for a bet valid?
  While a verbal contract can be valid, it is extremely difficult to prove in court. A written, signed, and stamped agreement is always recommended for enforceability.
• What is the document for such a challenge called?
  It can be called a simple “Agreement” or a “Memorandum of Understanding (MoU).” The title is less important than the clarity of the terms within it.
• How much does it cost to make such an agreement?
  The cost includes the price of the non-judicial stamp paper (which varies by state and the amount involved) and the drafting fees of the lawyer, which can vary based on the complexity and the lawyer’s experience.

What evidence is required?

To enforce the agreement in court, you will need the following evidence:

• The Original Agreement: The written agreement, duly signed by both parties and witnesses and executed on appropriate stamp paper, is the most crucial piece of evidence.
• Witness Testimony: The testimony of the witnesses who were present during the signing of the agreement and/or the challenge itself.
• Proof of the Event: Any photographs or videos of the challenge being conducted.
• Communications: Emails, text messages, or other written communications between the parties discussing the terms of the challenge and the agreement.
• Proof of Breach: Evidence that you demanded the payment and the other party refused or failed to pay.

How long will the investigation take?

There is no “investigation” in the criminal sense conducted by the police. The process is a civil suit. The duration of a civil suit for recovery of money can vary significantly depending on the court’s caseload, the complexity of the case, and the tactics used by the opposing party. It can take anywhere from several months to a few years to get a final judgment from the trial court.

Advocate Sudhir Rao, Supreme Court of India