Legal Definitions - chance bargain

A chance bargain is a type of contract where both parties knowingly and mutually agree to accept the risk that certain facts or circumstances, which they believe to be true at the time of the agreement, might actually turn out to be different or unknown. In essence, the parties are making a deal where they acknowledge and accept the uncertainty of a particular situation. As long as there is no fraud or misrepresentation involved, courts will generally uphold these agreements, meaning neither party can typically seek to change the terms or cancel the contract if the uncertain facts later prove to be different from what was initially assumed.

Here are some examples to illustrate this concept:

• Example 1: Purchasing an Antique Item "As Is"

  Imagine a collector attending an estate sale who finds an old painting. The seller states that they inherited it and believe it might be from a particular historical period, but they have no expert authentication and sell it "as is." The collector, an amateur art enthusiast, agrees to purchase the painting for a set price, hoping it might be a valuable original, but also understanding it could be a reproduction or of lesser value. Both parties acknowledge the uncertainty surrounding the painting's true origin and value.

  How this illustrates a chance bargain: In this scenario, both the seller and the buyer mutually agree to accept the risk regarding the painting's authenticity and actual market value. The buyer takes a chance that it might be a hidden gem, and the seller takes a chance that they might be selling a valuable piece for less than its true worth. If the painting is later authenticated as a priceless masterpiece, the seller cannot demand more money. Conversely, if it turns out to be a cheap imitation, the buyer cannot demand a refund or a reduced price, because they entered into the agreement fully aware of and accepting that uncertainty.

• Example 2: Buying Land for Potential Resource Exploration

  A mining company purchases a large tract of undeveloped land from a private landowner. While there have been historical rumors of a specific mineral deposit in the general region, no formal geological surveys have been conducted on this particular plot. The contract for sale explicitly states that the land is being sold "as is" regarding any subsurface resources, and the purchase price reflects the land's current undeveloped state, not any proven mineral wealth. The mining company hopes to find valuable minerals but understands the significant risk involved.

  How this illustrates a chance bargain: Here, both the landowner and the mining company are aware of the uncertainty surrounding the presence and quantity of valuable minerals beneath the land. The mining company is taking a chance that valuable resources might be present, and the landowner is taking a chance that they might be selling a property that could yield significant future profits for the buyer. They mutually agree to accept this risk. If the mining company later discovers a rich mineral vein, the original landowner cannot claim a share of the profits or demand additional payment. Similarly, if extensive exploration yields nothing, the mining company cannot seek a refund or price adjustment from the landowner.