Oregon 30-Hour Real Estate Law Practice Test

What is always required for a real estate contract to be considered valid?

1. Legal capacity

2. Consideration

3. Written agreement

4. Signature of both parties

The correct answer is: Consideration

For a real estate contract to be considered valid, consideration is a fundamental requirement. Consideration refers to something of value that is exchanged between the parties involved in the contract. This can be money, services, or any form of compensation. The presence of consideration distinguishes a valid contract from a mere promise, which may not hold enforceable value in a legal context. In real estate transactions, the consideration is typically the purchase price paid by the buyer to the seller in exchange for the property. This exchange is crucial as it demonstrates that both parties are entering into the agreement willingly and with mutual benefit. Without consideration, a contract may be deemed void or unenforceable. While other elements like legal capacity, a written agreement, and signatures are important to the execution and enforceability of contracts, consideration is the specific element that is always required for a contract's validity in real estate. In some instances, oral agreements may occasionally be enforceable if there is consideration; however, written agreements typically provide clarity and support enforceability in real estate transactions.