The word Aleatory is derived from the Latin Alea, which refers to a dice game. It was first used in the English language during the late 17th century, to describe events that depend on uncertain odds – just as rolling a dice does.
Today, Aleatory is used to describe anything that occurs by accident or completely by chance, from the shape of an inkblot to the bounce of a golf shot. It is even used in music; an Aleatory or Chance Composition is a piece in which certain parts have been left blank. The idea is that the musician improvises during these sections, so that every performance is different.
It is also an important concept in law. In an aleatory contract, the performance of one or both of the parties concerned is contingent on a particular event occurring. The classification developed in later medieval Roman law, covering all contracts whose fulfilment was dependent on chance. This includes life annuities, speculative investment, gambling and insurance.
More and more examples of applying aleatory contracts are seen as the law and humanity evolve. Several modern forms of derivatives and options are aleatory contracts in their own right, for example, and the Civil Code of France features a chapter on them with specific provisions for life annuities and gambling. As modern civilization keeps growing, these contracts seem set to do the same.
Insurance versus Gambling
The most common forms of aleatory contracts are Insurance Policies. These are very similar in structure to gambles and bets, where one party will be paying much more to the other until something specific happens and then the situation will be reversed. You might keep putting money on landing a certain number when you spin the Roulette wheel in a casino, for example, or pay your insurance premium every month.
This could go on for an extended period of time, with you being the only party paying out money and the casino or insurance form being the only party receiving it. Then, when the specific chance event of landing on the Roulette wheel number or your house burning down occurs, you will be paid out a substantial amount.
The difference is that the gambler wants the chance event to occur, while the homeowner presumably does not. In other words, as a homeowner you have an interest in the outcome that goes beyond the financial agreement. You’ll be getting paid out, but could lose precious heirlooms and treasured possessions, and will have to go through all the hassle of replacing your home and its contents. By contrast, when you win a gambling bet you’ll simply enjoy a large windfall.
Different Specific Regulations
It’s clear that insurance and online gambling Australia policies, while similar in some ways, are also very different. Countries differ in the specific rules they use to manage them, but the regulations for gambling and insurance institutions within a single jurisdiction tend to be quite different.
All types of aleatory contract are quite distinct and specific. When you are in any situation where they are relevant, from gambling to life annuities and speculative investment, check the terms and conditions very carefully. Be sure you are totally happy before you agree to anything.