The Online Library of Liberty

A project of Liberty Fund, Inc.

• Foreword
• To the Right Reverend Edmund Law, D.D. Lord Bishop of Carlisle
• Preface
• The Principles of Moral and Political Philosophy
• Book I: Preliminary Considerations
• Chapter 1: Definition and Use of the Science
• Chapter 2: The Law of Honour
• Chapter 3: The Law of the Land
• Chapter 4: The Scriptures
• Chapter 5: The Moral Sense
• Chapter 6: Human Happiness
• Chapter 7: Virtue
• Book II: Moral Obligation
• Chapter 1: The Question Why Am I Obliged to Keep My Word? Considered
• Chapter 2: What We Mean When We Say a Man Is Obliged to Do a Thing
• Chapter 3: The Question, Why Am I Obliged to Keep My Word? Resumed
• Chapter 4: The Will of God
• Chapter 5: The Divine Benevolence
• Chapter 6: Utility
• Chapter 7: The Necessity of General Rules
• Chapter 8: The Consideration of General Consequences Pursued
• Chapter 9: Of Right
• Chapter 10: The Division of Rights
• Chapter 11: The General Rights of Mankind
• Book III: Relative Duties
• Part I: Of Relative Duties Which Are Determinate
• Chapter 1: Of Property
• Chapter 2: The Use of the Institution of Property
• Chapter 3: The History of Property
• Chapter 4: In What the Right of Property Is Founded
• Chapter 5: Promises
• Chapter 6: Contracts
• Chapter 7: Contracts of Sale
• Chapter 8: Contracts of Hazard
• Chapter 9: Contracts of Lending of Inconsumable Property
• Chapter 10: Contracts Concerning the Lending of Money
• Chapter 11: Contracts of Labour Service
• Chapter 12: Contracts of Labour Commissions
• Chapter 13: Contracts of Labour Partnership
• Chapter 14: Contracts of Labour Offices
• Chapter 15: Lies
• Chapter 16: Oaths
• Chapter 17: Oath In Evidence
• Chapter 18: Oath of Allegiance
• Chapter 19: Oath Against Bribery In the Election of Members of Parliament
• Chapter 20: Oath Against Simony
• Chapter 21: Oaths to Observe Local Statutes
• Chapter 22: Subscription to Articles of Religion
• Chapter 23: Wills
• Part II: Of Relative Duties Which Are Indeterminate
• Chapter 1: Charity
• Chapter 2: Charity the Treatment of Our Domestics and Dependants
• Chapter 3: Slavery
• Chapter 4: Charity Professional Assistance
• Chapter 5: Charity Pecuniary Bounty
• Chapter 6: Resentment
• Chapter 7: Anger
• Chapter 8: Revenge
• Chapter 9: Duelling
• Chapter 10: Litigation
• Chapter 11: Gratitude
• Chapter 12: Slander
• Part III: Of Relative Duties Which Result From the Constitution of the Sexes
• Chapter 1: Of the Public Use of Marriage Institutions
• Chapter 2: Fornication
• Chapter 3: Seduction
• Chapter 4: Adultery
• Chapter 5: Incest
• Chapter 6: Polygamy
• Chapter 7: Of Divorce
• Chapter 8: Marriage
• Chapter 9: Of the Duty of Parents
• Chapter 10: The Rights of Parents
• Chapter 11: The Duty of Children
• Book IV: Duties to Ourselves
• Chapter 1: The Rights of Self-defence
• Chapter 2: Drunkenness
• Chapter 3: Suicide
• Book V: Duties Towards God
• Chapter 1: Division of These Duties
• Chapter 2: Of the Duty and of the Efficacy of Prayer, So Far As the Same Appear From the Light of Nature
• Chapter 3: Of the Duty and Efficacy of Prayer As Represented In Scripture
• Chapter 4: Of Private Prayer, Family Prayer, and Public Worship
• Chapter 5: Of Forms of Prayer In Public Worship
• Chapter 6: Of the Use of Sabbatical Institutions
• Chapter 7: Of the Scripture Account of Sabbatical Institutions
• Chapter 8: By What Acts and Omissions the Duty of the Christian Sabbath Is Violated
• Chapter 9: Of Reverencing the Deity
• Book VI: Elements of Political Knowledge
• Chapter 1: Of the Origin of Civil Government
• Chapter 2: How Subjection to Civil Government Is Maintained
• Chapter 3: The Duty of Submission to Civil Government Explained
• Chapter 4: Of the Duty of Civil Obedience, As Stated In the Christian Scriptures
• Chapter 5: Of Civil Liberty Civil Liberty Is the Not Being Restrained By Any Law, But What Conduces In a Greater Degree to the Public Welfare.
• Chapter 6: Of Different Forms of Government
• Chapter 7: Of the British Constitution
• Chapter 8: Of the Administration of Justice
• Chapter 9: Of Crimes and Punishments
• Chapter 10: Of Religious Establishments and of Toleration
• Chapter 11: Of Population and Provision; and of Agriculture and Commerce, As Subservient Thereto
• Chapter 12: Of War, and Military Establishments

Chapter 8

Contracts of Hazard

By Contracts of Hazard, I mean gaming and insurance.

What some say of this kind of contracts, “that one side ought not to have any advantage over the other,” is neither practicable nor true. It is not practicable; for that perfect equality of skill and judgement, which this rule requires, is seldom to be met with. I might not have it in my power to play with fairness a game at cards, billiards, or tennis; lay a wager at a horse-race; or underwrite a policy of insurance, once in a twelve-month, if I must wait till I meet with a person, whose art, skill, and judgement, in these matters, is neither greater nor less than my own. Nor is this equality requisite to the justice of the contract. One party may give to the other the whole of the stake, if he please, and the other party may justly accept it, if it be given him; much more therefore may one give to the other a part of the stake; or, what is exactly the same thing, an advantage in the chance of winning the whole.

The proper restriction is, that neither side have an advantage by means of which the other is not aware; for this is an advantage taken, without being given. Although the event be still an uncertainty, your advantage in the chance has a certain value; and so much of the stake, as that value amounts to, is taken from your adversary without his knowledge, and therefore without his consent. If I sit down to a game at whist, and have an advantage over the adversary, by means of a better memory, closer attention, or a superior knowledge of the rules and chances of the game, the advantage is fair; because it is obtained by means of which the adversary is aware: for he is aware, when he sits down with me, that I shall exert the skill that I possess to the utmost. But if I gain an advantage by packing the cards, glancing my eye into the adversaries’ hands, or by concerted signals with my partner, it is a dishonest advantage; because it depends upon means which the adversary never suspects that I make use of.

The same distinction holds of all contracts into which chance enters. If I lay a wager at a horse-race, founded upon the conjecture I form from the appearance, and character, and breed, of the horses, I am justly entitled to any advantage which my judgment gives me: but, if I carry on a clandestine correspondence with the jockeys, and find out from them, that a trial has been actually made, or that it is settled beforehand which horse shall win the race; all such information is so much fraud, because derived from sources which the other did not suspect, when he proposed or accepted the wager.

In speculations in trade, or in the stocks, if I exercise my judgement upon the general aspect and prospect of public affairs, and deal with a person who conducts himself by the same sort of judgement; the contract has all the equality in it which is necessary: but if I have access to secrets of state at home, or private advice of some decisive measure or event abroad, I cannot avail myself of these advantages with justice, because they are excluded by the contract, which proceeded upon the supposition that I had no such advantage.

In insurances, in which the underwriter computes his risk entirely from the account given by the person insured, it is absolutely necessary to the justice and validity of the contract, that this account be exact and complete.