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Legal Definition and Related Resources of Aleatory contract
Meaning of Aleatory contract
In civil law. A mutual agreement, of which the effects, with respect both to the advantages and losses, whether to all the parties or to some of them, depend on an uncertain event. Civ. Code La. art. 2951. The term includes contracts, such as insurance, annuities, and the like.
What does Aleatory contract mean in American Law?
The definition of Aleatory contract in the law of the United States, as defined by the lexicographer Arthur Leff in his legal dictionary is:
Broadly, any contract the performance of which by either party is dependent upon a fortuitous or uncertain event. (Note that this is to be distinguished from the “aleatory” feature of almost all contracts, that profitability may depend on chance.) The concrete example most frequently given is the insurance contract: The insured party must pay premiums, but the insurer need not do anything at all unless the insured event, say a fire, or a death, takes place during the relevant time period. But there are non-insurance aleatory contracts too, e.g., a contract by which one agrees to buy 5000 tons of wheat (or 5000 shares of stock) if but only if the market price goes above or below a particular level. Though some “aleatory contracts” are obviously perfectly lawful and enforceable, in many jurisdictions, some are not, e.g., a contract to pay $10,000 if the other party is dealt three aces when one is dealt only three kings. For those kinds of aleatory contracts, and the grave difficulties in coming up with a clear conceptual distinction between them and the lawful, enforceable kind, see gambling contract.
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This definition of Aleatory Contract Is based on the The Cyclopedic Law Dictionary . This entry needs to be proofread.
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