What is "aleatory contract"

n. a contract whose performance by one party depends on the occurrence of an uncertain contingent event (but if it is contingent on the outcome of a wager it is not enforceable)

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. 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.

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. 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.