inteemediat accounting i need explaination

2- Tender corporation is involved in litigation regarding a faulty product sold in prior year, the company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is 40% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be $500,000. Instructions: a- The litigation is classified as a contingent liability or a provision? Explain your answer. (1 mark)