Aleatory contract

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“Aleatory” means, essentially, random; an aleatory contract is one which references some uncertainty (from the point of view of the parties) which determines the parties’ respective rights and obligations. A payoff depending on event beyond the parties’ practical control.

In other walks of life this might include gambling or insurance, but a financial services lawyer will most readily recognise an aleatory contract as a derivative. You are only likely to encounter the expression in the context of a netting opinion concerning the insolvency regime in a jurisdiction somewhere in the low countries, so one can only surmise, if you have come to this page, that you have just been reading one. Please accept our sincere commiserations.

See also

• Netting opinion