Which of the following are elements of a legal contract between two entities?

• A. Competent Parties; Lawful Subject; Mutual Consent; Legal Consideration; Form Permitted by Law
• B. Offer; Acceptance; Consideration; Legality
• C. Mutual Consent; Agreement; Performance
• D. Offer; Acceptance; Discretion

Answer: (A)

A legal contract between two entities rests on five essential elements: capacity, legality, mutual assent, consideration, and proper form. Capacity means both parties have the legal ability to enter into a contract; this covers being of sufficient age and having the mental competence to understand the agreement, as well as corporate entities having the authority to contract. Legality requires the contract’s subject matter to be lawful and not against public policy. Mutual assent is the true meeting of minds, typically shown by an offer and an acceptance that agree to the same terms. Consideration is something of value exchanged between the parties—a promise, an act, or forbearance that motivates the agreement. Proper form means compliance with any statutory or regulatory requirements about how the contract must be executed, such as writing requirements or other formalities.

Together, these elements ensure the contract is enforceable. Without capacity or legality, the agreement may be void. Without mutual assent, there is no genuine agreement. Without consideration, there is no bargained-for exchange. And without the required form, the contract may be unenforceable under law.

The other options leave out or misplace essential aspects: one omits capacity and form, another treats performance as a contract element (performance comes after formation, not a prerequisite), and yet another introduces discretion, which isn’t a standard contract requirement.