California Real Estate Practice Exam

All valid contracts must contain the following elements or characteristics, except:

1. Competent parties

2. Consideration

3. Legal object

4. Must be in writing

The correct answer is: Competent parties

A valid contract in California, and generally in contract law, must contain several essential elements, which include competent parties, consideration, and a legal object. Competent parties refer to individuals who are legally able to enter into a contract, usually meaning they are of legal age and have the mental capacity to understand the contract terms. Consideration is the value exchanged between the parties, which can be in the form of money, services, or goods, and it represents an essential incentive for both parties to fulfill their promises. The legal object means that the contract must be for a lawful purpose, as agreements for illegal activities are not enforceable. While it's often best practice for contracts to be in writing, especially to comply with the Statute of Frauds in certain situations (like real estate transactions), not all contracts are required to be written to be valid. Oral contracts can also be enforceable if they meet the other criteria. Therefore, the assertion that all valid contracts must be in writing does not hold true universally. This is why saying that "must be in writing" is not an essential element shows an understanding of contract validity beyond just formality, focusing instead on the foundational aspects that truly make a contract enforceable.