California Real Estate SalespersonContractsEasy
A buyer and seller sign a written purchase agreement for a home. The agreement states that the buyer will pay $400,000 in exchange for the seller conveying title. What element of a valid contract does the buyer's $400,000 payment represent?
- ALawful object
- BConsideration
- CCapacity
- DMutual assent
Show answer & explanationAnswer & explanation
Correct answer: B. Consideration
Consideration is something of value exchanged between parties to support a contract; the buyer's payment of $400,000 in exchange for the seller's promise to convey title is the consideration for the agreement.
Why the other options are wrong
- A. Lawful object refers to the legality of the contract's purpose, not the payment.
- C. Capacity refers to legal ability to contract, not the value exchanged.
- D. Mutual assent is the meeting of the minds (offer and acceptance), not the payment itself.
Consideration
Something of legal value exchanged between contracting parties, such as money, goods, services, or a promise, that supports the formation of a valid contract.
- One of the four essential elements of a valid contract (capacity, mutual consent, lawful object, consideration).
- Can be money, property, services, or a promise to act or forbear.
- Without consideration, a contract may be unenforceable unless it falls under an exception.
Memory trick: CLOC: Capacity, Lawful object, Offer/acceptance, Consideration.