Which scenario illustrates an aleatory contract?

• A. A policy where the premium is large but payout is small
• B. A contract where both parties perform simultaneously
• C. A scenario where the insured pays a small premium and could receive a large payout if a loss occurs
• D. A contract where both parties perform at the same time

Answer: (C)

Aleatory contracts are defined by performance that depends on an uncertain future event and an exchange of value that is unequal. In insurance, you pay a relatively small premium now, and you could receive a large payout if a loss occurs. The payout is contingent on the occurrence of the insured event, and the amount exchanged (small premium for a potentially large benefit) reflects that uncertainty and imbalance. That combination—uncertain outcome plus potentially large payoff for the insured—best fits the idea of an aleatory contract.

The other scenarios don’t capture that contingent, uneven exchange. A setup where both sides perform at the same time describes a different kind of contract with simultaneous obligations, not the contingent nature that characterizes an aleatory arrangement.