Key Takeaways

  • A contingency contract sets out behavior-based agreements between two parties, often tied to rewards or consequences.
  • These contracts are commonly used in therapy, education, business negotiations, and behavior intervention plans.
  • Clear, measurable goals and mutual consent are essential components of effective contingency contracts.
  • In educational settings, rewards should be meaningful to the student and linked to specific, observable behaviors.
  • In legal or business contexts, contingency contracts can manage risk and align interests around future uncertainties.

Contingency contracts are primarily designed to enhance desirable behaviors. Such a contract can be between the following parties:

  • Therapist and Client
  • Parent and Child
  • Teacher and Student

Contingency contracts target undesirable behaviors and conditions while helping a person achieve better outcomes. For instance, a parent can enter a contingency contract with a child that does not finish his or her homework on time. The child can agree to finish his or her homework before supper. If the child finishes the homework, he or she can watch an hour of TV. However, if the child fails to complete the homework before dinner, he or she must use TV time to finish all assignments.

Negotiating Skills

In essence, contingency contracts are used to manage risk and achieve a desired result. Negotiators may attempt to overcome differences of opinion regarding certain events through various persuasion strategies. The addition of penalties or incentives based on future performances will protect all parties from potential risk.

Parties that disagree during negotiations should be ready to put their beliefs to the test through bets. Contingency contracts also work best in the following areas:

  • Professional Sports
  • Construction Projects
  • Real Estate

With that, negotiators in other areas could benefit most by adding penalties or incentives instead of using persuasion techniques that could yield lower odds of success.

Legal and Commercial Use Cases

In legal and commercial settings, contingency contracts are often used to structure agreements around uncertain outcomes, such as future performance or the resolution of disputes. In real estate, for example, a contingency clause may make the completion of a sale dependent on events like securing financing, passing inspections, or the sale of another property.

In law, contingency fee agreements are common, especially in personal injury cases. Under such contracts, an attorney only receives payment if the client wins the case or achieves a settlement. This type of arrangement aligns incentives and helps clients access legal representation without upfront costs.

These contracts are also used in business negotiations to overcome deadlocks by tying parts of the deal to future events—such as sales targets, delivery dates, or quality benchmarks. Contingency clauses can help mitigate risk while encouraging both parties to work toward a common goal.

Student-Teacher Contracts

A contingency contract between teacher and student is meant to achieve certain academic goals that out of a student. In addition, the contract rewards and reinforces a positive work ethic based on desired performances.

  • Note: A contingency contract should have a sole purpose outlined in the contract.

Provisions should not include anything that places a student in physical danger or forces the student to harm his or herself in any way. When it comes to the definition of a contract goal, you must assess a student’s current performance level. If a teacher wants a student to practice raising his or her hand instead of speaking abruptly, establish the degree of behavior before coming up with a sound contract.

Another scenario is if a teacher wants a student to complete more math assignments. First, the teacher must assess a student’s current performance. You can craft a certain goal if a student only completes 60 percent of all math assignments.

Teachers should observe current behaviors for a period of one week. After, you should come up with a goal and transform it into a plan of action. The student is then aware of the terms of the contract, and the student can negotiate accordingly. Once both parties agree to terms, all information should be outlined in the contract in objective and clear language.

One objective may include the student raising his or her hand and waiting to be called upon at least five times per hour. This would be a solid plan if the student raises a hand and interrupts five times.

ABA and Therapeutic Applications

In Applied Behavior Analysis (ABA), contingency contracts are powerful tools for promoting desired behaviors in children and adults with developmental or behavioral disorders. These contracts, sometimes called "behavior contracts," clearly define:

  • The expected behavior (e.g., brushing teeth, completing chores)
  • The reward for compliance (e.g., extra playtime, tokens)
  • The consequence for non-compliance

For example, a Board Certified Behavior Analyst (BCBA) may use a contingency contract to help a child with autism increase social interactions. The contract might state that the child earns a preferred activity after greeting peers appropriately three times during recess.

Contracts should be age-appropriate, written in accessible language, and reviewed regularly. Reinforcements must be delivered consistently and immediately to strengthen the association between behavior and reward.

Contract Performances

When it comes to students, determining the right conditions for the contract include:

  • Activities
  • Times
  • Classes

Such parameters detail a desired performance level based on current circumstances. In addition, the contract should reward or incentivize a student if he or she lives up to her end of the agreement. Rewards should appeal to the student’s interests, but within reason. Solid reward ideas include:

  • Small Toys
  • Candies
  • Homework Passes
  • Free Time

All rewards and incentives should be awarded immediately upon honoring the contract terms. Further, you should include dates in which the student completes assignments or honors the agreement, and you should evaluate his or her performance on a weekly basis to determine a student’s progress. If you see no progress after a couple weeks, you should reevaluate the terms of the contract and enter into another phase of negotiation. The current terms could be too hard for a student to achieve. Always include a completion date for the student to reach the primary goal.

Key Elements of an Effective Contingency Contract

Whether used in schools, therapy, or negotiations, every contingency contract should include the following components:

  • Clearly Defined Behavior: The behavior should be specific, observable, and measurable.
  • Conditions and Time Frame: The setting and timing for the behavior (e.g., during math class, once daily, within a week).
  • Reinforcement Terms: The positive outcome or reward, and how it will be delivered.
  • Signatures: Agreement from all parties involved, demonstrating mutual understanding.
  • Review and Adjustment Plan: A method for monitoring progress and revising the contract if goals aren’t met.

Clarity is critical—avoid vague terms like “try harder” or “be good.” Instead, use quantifiable goals such as “submit homework on time three days in a row.”

Signing the Contract

Ensure that the contract is written in terms that the student can understand. Use words such as rewards instead of reinforcement so the student can relate to the terms. When you present the terms, the student and teacher should sign the document. Further, it may be prudent to have a third party in the form of a friend or adult as a witness to the contract signing.

When Contingency Contracts Are Not Appropriate

While contingency contracts can be highly effective, there are situations where they may not be appropriate or sufficient on their own:

  • Cognitive Limitations: If the individual cannot understand the terms or link behaviors to outcomes, alternative strategies may be better.
  • Coercion Risks: Contracts should never be used to manipulate or pressure someone into unsafe or unethical behavior.
  • Lack of Consistent Reinforcement: If rewards cannot be reliably delivered, the contract may lose effectiveness and trust.

In these cases, behavioral support plans or professional interventions might be more suitable.

Frequently Asked Questions

  1. What is a contingency contract in ABA?
    A contingency contract in ABA is a formal agreement that outlines a target behavior, the conditions under which it should occur, and the rewards or consequences based on performance.
  2. How does a contingency contract differ from a regular contract?
    Unlike standard contracts, contingency contracts are conditional on specific outcomes or behaviors and are often used to motivate or manage performance rather than transfer goods or services.
  3. Can contingency contracts be used in the workplace?
    Yes, they are commonly used in employment settings to tie bonuses or promotions to performance metrics such as sales goals or project completion.
  4. Are contingency contracts legally enforceable?
    It depends. In business and legal contexts, they may be enforceable if they meet contract law requirements. In educational or therapeutic settings, they are more behavioral tools than legal documents.
  5. What makes a contingency contract successful?
    Clear, measurable goals, mutual agreement, immediate reinforcement, and regular review are key factors in ensuring a contingency contract achieves its purpose.

To learn more about contingency contracts, post your legal need to our UpCounsel marketplace. UpCounsel’s lawyers will help you draft contingency contracts of any kind, so you can achieve a desired result from another party. Further, our lawyers will guide you how to draft a contingency contract legally while ensuring that all parties are comfortable with the contract terms.