Definition: An aleatory contract is commonly used to avoid the complete fulfillment of an obligation, as the event for which the obligation was made may not have occurred.
Some examples of aleatory contracts include an employment agreement that says you will not work full time if you don’t have to or pay for training that you may not need. In some countries, public utilities are also considered an aleatory contract since there is no specified time for performance. This means that in these types of cases, one party may not respect the rights of the other unless certain conditions are met.
A clause in an aleatory contract may state that the contract is automatically terminated if a certain event occurs. This event could be an event on the part of one or more parties, an event on the part of all parties, or a combination of both. For example, suppose it is deemed uneconomical by one or more parties to perform an action against the expectations of the contract. In that case, the contract can be unilaterally modified or terminated by withdrawing it immediately. In this way, there may be added value to an agreement even if it seems at first glance to be less beneficial.
The aleatory contract is typically a unilateral agreement that cannot be broken except by mutual consent. The parties bound by the contract are the original contracting parties (the original parties are the state, county, or locality that entered into the contract and every person within those parties’ jurisdiction at that time). A typical example is an insurance contract, wherein the insurer agrees to pay someone’s losses but refuses to pay the person’s profits, and vice versa. In some cases, it may be that most people would agree to a unilateral contract even if they did not fully understand its terms (e.g., if they believed the other party had thrown away something). But in most cases, the parties never intended the contract to be so non-extinguishable, and it would be shocking if they reversed their position.
An annuity contract is the type of Aleatory contract. An annuity contract is generally favored by investors who wish to preserve their earning potential and benefits while enjoying a steady income. The specific terms of an annuity contract will depend on the individual investor and the company they choose to work with. Whatever the terms of your contract, it is important to remember that your investment cannot be evaluated until you receive it.
When you buy an annuity contract, your money is not being paid to an investment company. Instead, the money is being paid to the company that created the underlying security — usually a life insurance company. The whole point of an annuity contract is to get money in the future when you are not expected to work as usual — usually because of death or disability.
An aleatory contract may be written so that it may be altered or rejected at any time. There is usually one set of terms that governs all terms after the initial agreement, although the parties may add additional terms if they wish. Although the original terms are considered part of the contract and have to be performed by both parties, submission of an amended version may reduce or increase the value of the contract. An aleatory contract is often better than a written contract because it permits unforeseen circumstances to affect its terms.