Parry is a avoidance skill used by all classes. This skill is of particular importance to Fighters. It gives you a chance to ward off a physical attack. This raises your parry roll chance, which has a chance of being a riposte that counterstrikes the attacker.
In oder to raise the skill you need to get hit by melee weapons.
Your chance to parry is based off your parry skill relative to the attackers offensive skill. Then on a successful parry you have base of 20% chance to riposte which is normalized by your weapon delay. source
The difference between contested and unontested is that contested is allways based on your skill/Level and the mobs level that is hitting you.

• contested Parry
  • Category:Parry (Equipment) - Equipment that modifies the Parry skill.
  • Category:Parry Skill Adornments - Adornments that modifies the Parry skill.
  • Category:Buff (Spell Type) - some buffs increase or decrease the Parry skill too

• uncontested Parry
  • Category:Uncontested Parry - Equipment, Spells or AA's gives increases your chance to parry a physical attack the same % of times regardless of the attackers offensive skill.
  • Category:Parry % Adornments - Adornments that give uncontested Parry