Consideration
Offer and Acceptance
Free Consent by the parties to the contract
Capacity to contract
Answer is Right!
Answer is Wrong!
The correct answer is: A. Consideration
Consideration is the price paid for the promise in a contract. It is the element of a contract that distinguishes it from a gift. In order for a contract to be valid, there must be consideration for each party’s promise. Consideration can be anything of value, including money, goods, services, or even a promise to do something.
In the case of a contract of insurance, the consideration is the premium that the insured pays to the insurer. The insurer’s consideration is the promise to pay the insured if the insured suffers a loss that is covered by the policy.
The other options are not correct because they are not elements of a valid contract.
- Offer and acceptance are the elements that create a contract. An offer is a proposal to make a contract. An acceptance is a response to an offer that indicates the offeree’s willingness to be bound by the terms of the offer.
- Free consent by the parties to the contract is an essential element of a valid contract. The parties must agree to the terms of the contract voluntarily and without duress.
- Capacity to contract is the ability of a person to enter into a contract. In general, adults have the capacity to contract. However, there are some exceptions, such as minors and people with mental disabilities.