To see the ambiguity, consider that the agreement was executed in July 30, 1937 when Richard was ten years old. The United States did not enter World War II until the attack on Pearl Harbor on December 7, 1941, when Richard was 14. Prior to that attack, many were convinced that the United States would stay out of the war.
There are three possibilities.
The first two: The parents foresaw the possibility of Richard being drafted and
(1) intended that George would pay the $1200 while Richard was in the army, or
(2) intended that George would not pay the $1200 while Richard was in the army.
The third possibility: It did not even cross the parents' minds that Richard might be drafted into the army and they made no decision about what George's obligations would be if indeed Richard were drafted.