A contingent contract is an agreement that states which actions under certain conditions will result in specific outcomes.
The contract is characterized as "contingent" because the terms are not final and are based on certain events or conditions occurring.
[1] Further, contingency contracts can foster an agreement in negotiations involving resolute differences of expectations about the future.
Although contingent contracts concerning employment packages are more the exception than the norm, these types of negotiations can be very successful, allowing both parties to walk away feeling very satisfied with the newly agreed upon arrangement.
[6] Contingency contracts can create value by causing each negotiating party to stop arguing about their different beliefs.