Paralegal Advanced Competency Exam (PACE) Practice Exam

Which of the following is essential for a valid contract under common law?

1. Acceptance, consideration, and acknowledgment

2. Acceptance, offer, and consideration

3. Offer, negotiation, and acceptance

4. Consideration, performance, and waiver

The correct answer is: Acceptance, offer, and consideration

For a contract to be considered valid under common law, it must contain certain essential elements. The correct answer highlights three of these fundamental components: acceptance, offer, and consideration. The offer represents a proposition made by one party, which indicates a willingness to enter into a contract under specific terms. It serves as the basis from which the other party can agree to the terms. Once the offer is made, acceptance occurs when the other party agrees to those terms, thereby demonstrating their intention to be bound by the contract. Consideration is the next crucial element, referring to something of value exchanged between the parties involved in the contract. This could be in the form of money, services, goods, or a promise to refrain from an action. Consideration is what differentiates a contract from a mere promise or gift, as it establishes that both parties are giving something up in exchange for the other party’s performance or promise. Together, these three elements create a binding agreement recognized by law. Other options presented in the question include elements that may be part of the contracting process, such as negotiation or acknowledgment, but they do not encompass the essential legal components required for a valid contract under common law.