Introductory Business Law CLEP Prep Practice Exam

What is the consideration element of a contract?

1. That both parties have given something of value

2. That all parties involved are in agreement

3. That all parties involved have read the contract

4. That the contract has been signed by all parties

The correct answer is: That both parties have given something of value

The consideration element of a contract refers to something of value that is promised by each party involved in the contract. Option B is incorrect because while all parties must be in agreement, this alone does not constitute consideration. Option C is incorrect because reading the contract is not considered a form of consideration. Option D is incorrect because while a signed contract is important for enforceability, it does not necessarily indicate the existence of consideration. Only option A accurately describes the consideration element of a contract.