A contract in which the insured’s payment is small relative to the insurer’s potential loss is called

A contract in which the insured’s payment is small relative to the insurer’s potential loss is called

• A. Aleatory contract
• B. Unilateral contract
• C. Contract of adhesion
• D. Conditional contract

Answer: (A)

The main idea is the aleatory nature of the contract, where the outcome depends on an uncertain event and the values exchanged are unequal. In insurance, the insured pays a relatively small premium, while the insurer potentially faces a far larger loss if a covered event occurs. That imbalance—small payment upfront for the chance of a large payout later—defines an aleatory contract. The other terms describe different features (one-sided promises, standard-form agreements, or conditions) and don’t capture this unequal, risk-dependent exchange.

The main idea is the aleatory nature of the contract, where the outcome depends on an uncertain event and the values exchanged are unequal. In insurance, the insured pays a relatively small premium, while the insurer potentially faces a far larger loss if a covered event occurs. That imbalance—small payment upfront for the chance of a large payout later—defines an aleatory contract. The other terms describe different features (one-sided promises, standard-form agreements, or conditions) and don’t capture this unequal, risk-dependent exchange.