Article III. On Aleatory Contracts

313. Notion. Aleatory contracts, so called from alea, i.e., an uncertain event, are those by which an uncertain gain is sought or an uncertain loss is averted for a certain price given. It is necessary, however, that this uncertainty of gain or loss not only truly be present on the part of each contracting party, but also that it be nearly equal; otherwise injustice is committed.

The following can be held as a general principle: All aleatory contracts are lawful, provided:

1. that the chance be morally equal between each contracting party (unless, however, one contracting party, knowing the inequality, nevertheless wishes to contract);

2. that no frauds be committed;

3. that there be no scandal and no prohibition of positive law.

We shall give the application of this principle in the following aleatory contracts, which seem to be the principal ones, namely: 1. insurance; 2. wagers; 3. games; 4. lotteries; 5. stock-exchange speculations.