Offer and acceptance
Consideration
Free consent
Capacity of parties to contract
Answer is Right!
Answer is Wrong!
The correct answer is B. Consideration.
Consideration is the price paid for the promise made in a contract. It is what each party gives up in order to receive the promise of the other party. Consideration can be anything of value, including money, goods, services, or a promise to do something.
In the case of a contract of insurance, the consideration is the premium paid by the insured in exchange for the promise of the insurer to pay out a claim if the insured suffers a loss.
The other options are not correct because they do not deal with premium.
- Offer and acceptance are the two essential elements of a valid contract. An offer is a proposal to make a contract, and acceptance is an agreement to the terms of the offer.
- Free consent is the requirement that both parties to a contract must agree to the terms of the contract voluntarily and without duress.
- Capacity of parties to contract is the requirement that both parties to a contract must have the legal capacity to enter into a contract. This means that they must be adults and of sound mind.