JD Next Practice Exam

Which principle of contract law is potentially violated by the differing understandings of Arnie and Bill?

1. Consideration

2. Mutual Assent

3. Capacity

4. Legality

The correct answer is: Mutual Assent

The principle that is potentially violated by the differing understandings of Arnie and Bill is mutual assent. Mutual assent is a foundational element in contract law, which requires that both parties involved in a contract agree to the same terms and conditions. This agreement is often demonstrated through the offer and acceptance process. When Arnie and Bill have differing understandings of the agreement, it indicates that they may not have reached a true consensus, which is essential for mutual assent to exist. Mutual assent ensures that both parties are on the same page regarding the content and implications of their agreement. Without this shared understanding, the enforceability of the contract may be called into question, as both parties must intend to enter into a binding agreement under the same terms for it to be valid. In contrast, consideration involves the exchange of value, capacity refers to the legal ability of parties to enter into a contract, and legality pertains to the lawfulness of the contract's subject matter. While these elements are also crucial in forming valid contracts, the specific issue of differing understandings directly relates to the concept of mutual assent.