Intro to Paralegal Studies Practice

What is a defining characteristic of a contract?

1. An agreement supported by consideration

2. An involuntary agreement between two parties

3. A mutual understanding without legal obligation

4. A promise made without any exchange of value

The correct answer is: An agreement supported by consideration

A defining characteristic of a contract is that it is an agreement supported by consideration. In legal terms, consideration refers to something of value that is exchanged between parties as part of the agreement. This can take the form of money, services, goods, or a promise to act (or refrain from acting) in a certain way. The presence of consideration is essential because it distinguishes contracts from mere promises or informal agreements that lack enforceability. Contracts without consideration may not hold up in court because the law generally requires a value exchange to uphold the obligations of the parties involved. The other options do not reflect the fundamental principles of contract law. For instance, an involuntary agreement, a mutual understanding without legal obligations, or a promise made without any exchange of value do not meet the necessary legal requirements to be considered valid contracts. Therefore, the characteristic of being an agreement supported by consideration is what makes a contract legally binding and enforceable.