ALEATORY CONTRACT
A mutual agreement between two parties in which
the performance of the contractual obligations of
one or both parties depends upon a fortuitous
event.
The most common type of aleatory contract
is an insurance policy in which an insured pays
a premium in exchange for an insurance company’s
promise to pay damages up to the face
amount of the policy in the event that one’s
house is destroyed by fire. The insurance company
must perform its obligation only after the
fortuitous event, the fire, occurs.
