Definition
A contingency is an uncertain future event that may or may not occur. The term carries two interrelated meanings in law: (1) the event or circumstance itself, and (2) the quality of uncertainty that defines that event's legal status.
In practice, the term appears across multiple legal contexts, each giving it a distinct operational meaning:
1. General: Any event dependent on chance, future circumstance, or conditions not yet determined. The event is real in possibility but unresolved in fact.
2. Contract law: A condition written into an agreement that must be satisfied before a party's obligations become enforceable. If the contingency does not occur, the obligation does not arise. Common examples include financing contingencies, inspection contingencies, and appraisal contingencies in real estate purchase agreements.
3. Property law: In the law of future interests, a contingency is the uncertainty that prevents a remainder or other future interest from vesting. A remainder dependent on a contingency — typically the survival of a person, the happening of an event, or the fulfillment of a condition — is a contingent remainder rather than a vested one.
4. Budget and appropriations law: A contingent expense is one that depends on an uncertain future event and therefore cannot be fixed in advance. In government appropriations, a line item for "contingencies" covers expenses not yet ascertained or foreseeable at the time of budgeting.
5. Fee arrangements: In legal practice, the term "contingency" is often used shorthand for a contingency fee — compensation to counsel conditioned on a successful outcome. This usage is derived from the general sense but has acquired a distinct professional and regulatory meaning.
Common Language
Modern common usage (Wiktionary): The quality of being contingent, of happening by chance; a possibility; something which may or may not happen; an unexpected expense or chance occurrence.
Historical common usage (Webster's 1913): "The quality or state of being contingent or casual; the possibility of coming to pass... An event which may or may not occur; that which is possible or probable; a fortuitous event; a chance."
The common and legal meanings are largely aligned in their core sense of uncertainty and conditionality. The meaningful gap lies in legal precision: ordinary usage treats a contingency as essentially a surprise or an unforeseen event, while legal usage extends the term to planned, expressly negotiated conditions — a financing contingency in a purchase agreement is neither accidental nor unexpected; it is a deliberately drafted term allocating risk. Researchers reading historical legal sources should watch for this tension between contingency as fortuity and contingency as designed conditionality.
Common Confusion
CONTINGENCY vs. CONDITION: The terms overlap substantially but are not synonymous. A condition is a requirement that triggers or defeats a duty; a contingency is the uncertain event that underlies the condition. In property law, a contingent remainder and a remainder subject to a condition precedent are often the same thing, but the vocabulary shifts by context and era. Historical sources use the terms interchangeably in ways that can mislead modern readers.
CONTINGENCY vs. CONTINGENT FEE: A contingency in contract or property law is an event or risk. A contingency fee is a compensation arrangement. The compression of "contingency fee" to "contingency" in colloquial legal practice can cause confusion when the term appears without context.
Recognized Forms
/SUBTYPES
Contingent remainder: A future interest in property that will not vest unless and until a specified uncertain event occurs. Distinguished from a vested remainder, which is already held subject only to possession being delayed.
Contingent liability: An obligation that will arise only if a specified event occurs — most commonly litigation outcomes, warranty claims, or guarantees. Relevant to both accounting standards and legal analysis of financial statements.
Contingent expense: An expenditure dependent on a future uncertain event, particularly in public appropriations. The amount or occasion of expenditure cannot be determined in advance.
Contingency fee: Attorney compensation conditioned on the successful resolution of a matter, typically calculated as a percentage of the recovery. Governed by professional conduct rules and, in some jurisdictions, capped by statute in specific case types.
Financing contingency / Inspection contingency / Appraisal contingency: Named contractual contingencies appearing in real estate purchase agreements, each specifying a condition that must be satisfied for the buyer's purchase obligation to become enforceable.
Why It Matters in Research
The word "contingency" is a term of art in at least four distinct legal fields — contract law, property law, appropriations law, and professional responsibility — and historical sources rarely signal which usage they intend. A passage from an 1880 treatise discussing "contingencies" in an estate plan means something quite different from the same word in an 1880 appropriations case.
In property law research, the contingent/vested distinction for remainders is foundational to understanding the Rule Against Perpetuities and related doctrines. Historical sources use "contingent" inconsistently: some apply it only to remainders with condition precedents attached to an unascertained person, while others apply it broadly to any remainder not yet possessory. This divergence is a genuine research trap — do not assume a consistent definition across centuries of property writing.
In contract research, the modern standardization of contingency clauses in real estate transactions is largely a twentieth-century development. Researchers working in earlier sources will find the concept expressed through condition precedent language rather than the label "contingency." The operational meaning is the same; the vocabulary is not.
In government and appropriations research, "contingencies" as a budget category appears in nineteenth-century municipal cases and has a technical meaning distinct from the general philosophical sense used in the same period by courts discussing property law. Cross-contamination between these usages in older digests is common.
The contingency fee, now heavily regulated, has its own historical arc: nineteenth-century courts treated contingent fee arrangements with suspicion as champerty-adjacent; modern law accepts them as standard practice within regulated limits. Historical dictionary entries on "contingency" do not capture this evolution — researchers must consult fee-specific sources.
Historical Dictionary Support
The historical sources are in close agreement on the core definition: a contingency is an uncertain future event. All five source dictionaries echo the same formulation — "an event that may or may not happen" — and several trace it to the same New York authority (People v. Yonkers, 39 Barb. 272) for the proposition that a contingent expense depends on a future uncertain event.
Burrill is the most minimal, defining contingency simply as "an event that may or may not happen; a possibility," without extending into subtypes. Black's (both editions) and Anderson add the most texture, noting the contingent remainder and contingent expense as recognized applications. Bouvier follows Webster's 1913 closely, reflecting the era's comfort with dictionary cross-referencing between common and legal usage.
None of the historical sources adequately addresses the contingency fee, which by the time of these dictionaries was recognized in practice but had not yet achieved the formal regulatory status that would make it a major dictionary entry. Researchers should not expect historical dictionary entries on "contingency" to illuminate professional responsibility questions.
The second edition of Black's adds a note on "contingency of a process" in Scots law — where two or more proceedings are connected — illustrating that even within a single dictionary, the term spans jurisdictional usages that do not translate directly into American practice.
Jurisdictional Note
In property law, the definition of contingent remainder and its relationship to the Rule Against Perpetuities has been modified by statute in many states, and several jurisdictions have abolished the common law Rule entirely or adopted the Uniform Statutory Rule Against Perpetuities. Researchers should not assume that historical common law treatment of contingent remainders governs in the jurisdiction under study. In contract law, contingency clause requirements and their effect on enforceability are creatures of state contract and real property law and vary at the margins.
Encyclopedia Cross-Reference
The Law Mind Real Estate Transactions & Construction Encyclopedia — Contingencies: Financing, Inspection, Appraisal, and Title Contingencies
The Law Mind Contracts & Commercial Law Encyclopedia — Specialized Contracts: Real Estate Purchase Agreements and Contingencies
The Law Mind Property Law Encyclopedia — Future Interests: Remainder (Vested, Contingent, Subject to Open)