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Simple English definitions for legal terms
contingent claim
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A quick definition of contingent claim:
A contingent claim is a type of claim that is dependent on a future event that may or may not happen. It is not yet due for payment and may never be paid. For example, if someone buys a lottery ticket, they have a contingent claim to the prize money if they win. However, if they don't win, the claim is never paid. It is like having a promise that may or may not be kept.
A more thorough explanation:
A contingent claim is a type of claim that is dependent on a future event that may or may not happen. It has not yet accrued and is uncertain.
- A person who has a life insurance policy that pays out only if they die before a certain age has a contingent claim.
- A company that has a contract to receive payment only if they complete a project by a certain date has a contingent claim.
These examples illustrate how a contingent claim is dependent on a future event. The person with the life insurance policy may live past the age limit, and the company may not complete the project on time, so they may not receive payment.