Definition:

An aleatory contract is a contract in which the future contingent event is the subject matter of the contract and its completion hangs entirely on the happening or non-happening of that event.

Characteristics:

• Contingency: The subject matter of the contract depends on the happening of a contingent event, which is uncertain and cannot be predicted with certainty.
• Uncertainty: The outcome of the contract is uncertain and depends on the outcome of the contingent event.
• Unilateral: Only one party has the power to perform the contract, and the other party has no control over the event that determines the contract’s completion.
• No mutual obligation: There is no mutual obligation between the parties to perform the contract if the contingent event does not occur.

Examples:

• Insurance policies: Insurance policies are aleatory contracts, as the insurer’s obligation to pay damages depends on the occurrence of an event, such as fire or theft.
• Contingent contracts: Contracts for future services or performance based on a contingent event, such as a contract for a commission if a sale is made.
• Promises contingent on a future event: Promises made contingent on a future event, such as a promise to repay a debt if a certain condition is met.

Key Points:

• Aleatory contracts are contracts where the completion hangs on a contingent event.
• The subject matter of the contract is contingent on an uncertain event.
• There is no mutual obligation to perform the contract if the event does not occur.
• Insurance policies are classic examples of aleatory contracts.