Future Business Leaders of America (FBLA) Business Law Practice Exam

Which of the following best describes the elements of an enforceable contract?

1. Agreement, Capacity, Legality, and Consideration

2. Intention, Negotiation, Agreement, and Obligation

3. Offer, Acceptance, Performance, and Goodwill

4. Clarity, Variety, Formality, and Evidence

The correct answer is: Agreement, Capacity, Legality, and Consideration

The elements of an enforceable contract are best encapsulated by the concepts of Agreement, Capacity, Legality, and Consideration. An Agreement is essential as it represents the mutual consent between parties, typically manifested through an offer and acceptance. For a contract to be enforceable, all parties involved must have the Capacity to contract, meaning they must be of legal age and sound mind, and not under duress or undue influence. Legality is crucial as the contract's purpose must be lawful; contracts formed for illegal activities are not enforceable. Finally, Consideration refers to something of value that each party gives to the other, which is necessary for a contract to be binding. This element ensures that there is a reciprocal exchange which supports the agreement. The other choices present elements that may be associated with contracts but do not accurately reflect the fundamental legal requirements for enforceability. Intention, for instance, while important in establishing seriousness in an agreement, does not by itself create a binding contract. Also, terms like Negotiation, Obligation, Performance, Goodwill, Clarity, Variety, Formality, and Evidence, while they may be relevant in various contexts of business dealings or negotiations, fail to encompass the core requisite elements that a legally binding contract