Oregon Construction Contractors (CCB) Practice Test

How many key elements are necessary for a contract to be binding?

1. Three

2. Five

3. Seven

4. Four

The correct answer is: Five

A contract must contain specific key elements for it to be considered binding and enforceable in a court of law. The five essential elements required for a binding contract include: 1. **Offer**: One party must make a clear proposal to enter into an agreement. 2. **Acceptance**: The other party must accept the terms of the offer exactly as presented, demonstrating mutual assent. 3. **Consideration**: There must be something of value exchanged between the parties, which can be money, services, goods, or a promise to refrain from doing something. 4. **Competence**: All parties involved must have the legal capacity to enter into a contract, meaning they are of legal age and sound mind. 5. **Legality**: The contract's purpose and terms must be lawful and not violate any public policy or laws. Recognizing these elements is crucial in understanding contract law, as any absence of one or more of these factors can render a contract void or voidable. Thus, five key elements form the foundation for creating a valid and enforceable contract between parties.