Elements of a Legal Contract

Question 1

Offer and Acceptance

Answer 1

requirements for the formation of a contract

Question 2

Consideration

Answer 2

the price one pays for another’s promise.

Question 3

Competent Parties

Answer 3

a party having legal capacity to enter into a contract, e.g., of legal age, mental capacity to understand the contract, and absent of duress.

Question 4

Contract of adhesion

Answer 4

a legal agreement that is drafted by one party, but not the other. “Take it or leave it.”

Question 5

Aleatory

Answer 5

the insurer doesn’t have to pay the insured until an event, such as a fire resulting in property loss

Question 6

Personal Contract

Answer 6

an agreement between two or more parties that creates a binding obligation for one or more of the parties to do something.

Question 7

Unilateral contract

Answer 7

only the insurer makes a legally enforceable promise to pay covered claims.

Question 8

Indemnity

Answer 8

a contractual obligation to compensate an individual or business for damages or losses they experience