Oregon 30-Hour Real Estate Law Practice Test

When offer and acceptance have occurred in a contract, what do both parties create?

1. A unilateral contract

2. A contract with contingencies

3. A mutual agreement

4. A binding obligation

The correct answer is: A mutual agreement

When offer and acceptance have occurred in a contract, both parties create a mutual agreement. This concept is central to contract law, as it signifies that both parties have willingly consented to the terms outlined in the offer. A contract is formed when one party makes an offer and the second party accepts that offer without modification. The mutual agreement, often referred to as a "meeting of the minds," establishes the intent of both parties to be bound by the terms of the contract. This mutuality also implies that both parties understand and agree to the same terms, which is essential for the enforceability of the contract. While a binding obligation is a related concept, the emphasis here is on the mutual understanding and agreement, which is the foundation for any contractual relationship. Thus, the formation of a mutual agreement is crucial for the contract to be recognized legally and for both parties to have obligations under that contract.