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Simple English definitions for legal terms
aleatory
Read a random definition: plain bond
A quick definition of aleatory:
Aleatory: When something is aleatory, it means that it depends on a chance event that may or may not happen. This term is often used to describe insurance contracts, which are agreements that only come into effect if something unexpected happens. For example, if you buy fire insurance for your house, the insurance company will only pay you if your house burns down due to a specific cause, like lightning. If your house burns down for a different reason, the insurance company won't have to pay you anything.
A more thorough explanation:
Aleatory means that something is dependent on an uncertain event or chance occurrence. This term is often used to describe insurance contracts.
An aleatory contract is a type of contract where the performance of the promise is dependent on the occurrence of a fortuitous event. In other words, one party performs an absolute act, and the other party's promise to perform an act is based on the chance of a specific event happening.
For example, a fire insurance company promises to pay a homeowner $20,000 if their house burns down due to lightning. The homeowner pays a premium for this coverage. However, if the house burns down due to an overheated fireplace, the insurance company is not liable.
Another example of an aleatory contract is a gambling agreement. In this type of contract, the performance of the promise is dependent on the outcome of a game of chance.
Overall, aleatory contracts are based on the idea that the performance of the contract is uncertain and dependent on a chance event.