AD Banker Comprehensive Practice Exam

All of the following are elements of a contract, except:

1. Offer and acceptance

2. Legal purpose

3. Authority

4. Consideration

The correct answer is: Authority

A contract is formed when certain essential elements are present. These include an offer and acceptance, legal purpose, and consideration. Let's break down these elements: Offer and acceptance refer to the mutual agreement between parties where one party proposes a deal (the offer), and the other party agrees to it (acceptance). This mutual assent is foundational to forming a contract. Legal purpose ensures that the contract is for a lawful reason and does not involve illegal activities. Contracts with illegal objectives are void and unenforceable. Consideration is the value exchanged between parties, which can be in the form of money, services, or goods. This exchange must occur for a contract to have enforceable obligations. The concept of authority pertains more to the capacity of the parties to enter into a contract, which is important but not classified as a fundamental element of a contract itself. Authority ensures that the individuals have the legal ability to engage in the contract, but it is not one of the core elements that defines a contract's existence. In summary, while authority is an important aspect of contractual relationships, it is not classified as one of the essential elements that makes a contract valid. Hence, it is the correct answer for what is not an element of a contract.