Aleatory contract
An aleatory contract is a contract in which the performance of one or both parties is contingent upon the occurrence of a particular event. The most common type of aleatory contract is an insurance policy.[1][2] Such an insurance contract may be a boon to one party but create a major loss for the other, as more in benefits may be paid out than actual premiums received, or vice versa.[3]
The term was a classification developed in later medieval Roman law to cover all contracts whose fulfilment depended on chance, including gambling, insurance, speculative investment and life annuities.[4] Many modern forms of derivatives and options may in some cases also be considered aleatory contracts. For example, the French civil code contains a chapter on aleatory contracts, with specific provisions for gaming (gambling) and life annuities.[5]
References
- ↑ Thomson-Gale Encyclopedia of American Law, courtesy of Jrank
- ↑ Black's Law Dictionary, 7th ed. 1999
- ↑ Barron's Dictionary of Insurance Terms, courtesy of Answers.com
- ↑ J. Franklin, The Science of Conjecture: Evidence and Probability Before Pascal (Baltimore: Johns Hopkins University Press, 2001), ch. 11.
- ↑ Text of French Civil Code (in English)