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.

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