Valid Contracts Quiz

A legally enforceable agreement between parties where a promise is exchanged for valuable consideration.

Something of value exchanged between parties in a contract, which can be a promise, an action, or a forbearance.

A promise to refrain from doing something, often used in contract negotiations.

Something considered sufficient and appropriate in value for what is offered in exchange within a contract.

A legally enforceable agreement between parties, containing 5 essential elements, that creates legal rights for all parties.

Both parties agree on the terms of the contract, showing a meeting of the minds.

Parties involved are legally capable of entering into a contract, meaning they are of sound mind and of legal age.

The consent given by parties to the contract is genuine and not influenced by fraud, duress, or undue influence.

A false statement made knowingly and intentionally to deceive.

A false statement made unknowingly but without reasonable grounds to believe it was true.

Withholding crucial information that would have changed the outcome of the agreement.

Making a promise without any intention of fulfilling it.

An unintended breach of duty that benefits the breaching party.

A misunderstanding about a key fact, often due to lack of awareness or incorrect information.

A misunderstanding about the law governing the contract, shared by all parties.

A contract that requires illegal activities or outcomes.

A contract that complies with all federal and state laws.

A contract that becomes impossible to fulfill due to an event that happens after the agreement is made.

A meeting of the minds occurs when all parties involved in a contract agree to the same terms and conditions, even if it took multiple offers and counteroffers to reach that agreement.

Consideration in a contract means something of value is exchanged by each party to demonstrate their commitment to the agreement.

Consideration can be a promise, money, property, forbearance (refraining from doing something), or services. It's what each party contributes to the contract.

A contract is considered legally binding only if both parties provide valuable consideration. Without it, the contract may be invalid because there's no mutual benefit.

While good consideration, like love and affection, can be present, it's generally not sufficient to make a contract legally binding and would likely be classified as a gift.

In a real estate contract, the buyer's promise to pay and the seller's promise to transfer the deed are considered the mutually valuable consideration.

Earnest money is a deposit made to show a buyer's good faith and commitment to the purchase, but it's not considered actual consideration for the contract.

For a contract to be legally valid, all parties involved must have the legal capacity to enter into agreements. This means they must be of legal age and sound mind.

In Pennsylvania, the age of majority is 18. Minors cannot enter into binding contracts, but they can void them when they reach adulthood.

Mentally incompetent individuals, declared by a judge or temporarily incapacitated due to intoxication, cannot enter into legally binding contracts.

Corporations have legal standing to enter into contracts just like individuals, with full responsibilities and obligations.

Reality of consent means that the agreement was made freely and voluntarily, without fraud, misrepresentation, mistakes, undue influence, or duress.

Both offer and acceptance and reality of consent are important for creating a valid contract. Offer and acceptance ensures agreement on terms while reality of consent confirms a voluntary and genuine agreement.

Some experts view reality of consent as implied within offer and acceptance, leading to a debate about whether there are four or five essential elements in a valid contract.