Georgia Property & Casualty Practice Exam

What type of contract provides significantly more benefits to one party compared to the other?

1. Conditional contract

2. Aleatory contract

3. Contract of adhesion

4. Unilateral contract

The correct answer is: Aleatory contract

The correct choice is the aleatory contract. An aleatory contract is characterized by the fact that the performance of one party is contingent upon an uncertain event, meaning that the benefits and obligations may not be equal. This type of contract often involves situations where one party pays a premium for a chance at a benefit that may or may not materialize, such as in insurance policies where the insurer collects premiums but only pays out under certain conditions, usually when a loss occurs. This inherently creates a scenario where one party's risk or payout can vastly outweigh the other's contributions, establishing an imbalance of benefits contingent on uncertain future events. In contrast, a conditional contract requires certain conditions to be met for the contract to be enforceable, but both parties usually have balanced obligations and benefits once those conditions are satisfied. A contract of adhesion is created when one party drafts the agreement and the other party has little to no ability to negotiate the terms, leading to a disparity in power rather than benefits. Lastly, a unilateral contract involves a promise made by one party in exchange for an act by another, which can also instigate a significant imbalance based on the performance of the other party but does not necessarily focus on the benefits being disproportionate.