What type of contract is considered an 'if-then' arrangement?

A conditional contract is characterized by an "if-then" arrangement because its validity and enforcement are dependent on the occurrence of certain conditions or events. In the context of insurance, for example, a life insurance policy is a conditional contract. The insurer's obligation to pay a death benefit to the beneficiaries is contingent upon the insured's death, which is the "if" condition. The "then" part applies when the death occurs, triggering the insurer's obligation to fulfill the contract terms.

This type of contract necessitates the fulfillment of specified conditions before one party is required to perform their contractual duties. For instance, in health insurance, coverage is effective if certain criteria are met, such as the payment of premiums and the occurrence of a covered event, like an illness. The emphasis on conditions distinguishes it from other types of contracts, such as mutual contracts, which involve agreements that are reciprocally binding without reliance on specific events or outcomes.