What is an example of an aleatory contract?

An aleatory contract is characterized by the fact that the performance of one party is dependent on an uncertain event, making it inherently unpredictable in terms of outcomes and payments. The life insurance policy is a prime example of this. In such a contract, the insurer agrees to pay a benefit upon the insured event, such as death, which is uncertain at the time the contract is initiated. The insured pays premiums that may never result in a payout if the event does not occur, highlighting the element of chance involved.

This uncertainty in the timing and occurrence of the triggering event, coupled with the disparateness in the values exchanged (premiums versus potential payout), clearly defines the aleatory nature of life insurance contracts. The element of risk that the insurer assumes contrasts with other contract types, where the obligations and outcomes tend to be more predictable and fixed, as seen in fixed payments for services or employment contracts.