Aleatory contract
Certified Financial Planner glossary · Certified Financial Planner
Definition
A contract in which the values exchanged are unequal and depend on an uncertain event.
Aleatory contract in plain English
A client pays 1,200 a year for a 500,000 life policy and may never collect, or the insurer may pay a fortune after one premium. That uneven, chance-driven exchange is an aleatory contract: the values exchanged are unequal and depend on an uncertain event. Insurance is the classic example; a fixed-fee service agreement is not. If a distractor talks about adhesion or utmost good faith, check whether the stem is really about unequal contingent values.
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