Fundamentals of Surveying (FS) Practice Exam

Which aspect is part of the consideration in a valid contract?

1. Ability to sign for an entity

2. Legal subject matter

3. Names of the party

4. Value

The correct answer is: Value

In a valid contract, consideration refers to something of value that is exchanged between the parties involved. This value can be in the form of money, services, or tangible goods. Consideration is essential because it establishes a mutual exchange, demonstrating that each party has something to gain or lose through the agreement. Without consideration, a contract may be deemed unenforceable since there would be no incentive for either party to fulfill their obligations. While the ability to sign for an entity, legal subject matter, and names of the parties are also important elements of a contract, they do not define the principle of consideration. The ability to sign ensures the parties are legally authorized to enter into the contract, while the legal subject matter confirms that the contract is for a lawful purpose. Additionally, the names of the parties identify who is bound by the contract. However, consideration is the element that encapsulates the value driving the contract, making it a crucial aspect for a legitimate agreement.