Court Reporter Practice Exam

What defines a contract?

1. An agreement enforceable in court

2. A verbal promise

3. An informal understanding

4. A non-binding agreement

The correct answer is: An agreement enforceable in court

A contract is fundamentally defined as an agreement that creates enforceable obligations between the parties involved, meaning it can be upheld in a court of law. This enforceability is a key characteristic that differentiates contracts from other forms of agreements. For a contract to be valid, it generally requires essential elements such as mutual assent, consideration, legal capacity, and a lawful objective. In contrast, the other choices describe aspects that do not meet the full criteria of a contract. A verbal promise may be seen as a moral commitment but lacks the legal enforceability required to be recognized as a contract unless it meets specific criteria under the law. An informal understanding often indicates a lack of formal documentation or agreement that is typically necessary for contracts. Lastly, a non-binding agreement suggests that the parties do not intend for the agreement to create enforceable obligations, which clearly falls short of the contract definition.