Investors Need no Longer Gamble on Legality of Contracts

The Gambling (Guernsey) Law 1971, which is the primary legislation in Guernsey dealing with wagering and gaming, did not contemplate investment contracts. Accordingly, there had been a residual question as to whether certain types of investment contracts could be caught under gambling legislation specifically as contracts for differences.

The Gambling (Amendment) (Guernsey) Law 2000 states that, for the avoidance of doubt, nothing in the Gambling Law 1971 shall be taken to render unlawful, void or unenforceable any otherwise lawful contract (i) which is entered into by one or more parties to it by way of business; and (ii) the making or performance of which by any party to it involves:

• dealing in any way with an investment;
  
  
• making arrangements for another person to deal in any way with an investment; or
  
  
• offering or agreeing to deal or to make such arrangements in relation to an investment.

The scope of investments is widely defined to include:

• shares;
  
  
• debentures;
  
  
• warrants;
  
  
• units or other interests in collective investment schemes;
  
  
• closed-ended limited partnerships or closed-ended unit trusts;
  
  
• rights under contracts of insurance; and
  
  
• rights under a contract of differences or under any other contract whose purpose or intended purpose is to obtain a profit or avoid a loss by reference to fluctuations in the value or price of property of any description, or in an index or other factor designated for that purpose in the contract.

For further information on this topic please contact Ian Kirk at Collas Day by telephone (+44 1481 723191) or by fax (+44 1481 724074) or by e-mail ([email protected]).