Georgia DECA Advertising Practice Test

Which of the following represents a correct definition of a contract?

1. An agreement enforceable by law

2. A verbal promise

3. A written document only

4. A handshake agreement

The correct answer is: An agreement enforceable by law

A contract is fundamentally defined as an agreement that is enforceable by law, meaning that it is a legally binding arrangement between two or more parties. This definition encompasses both written and verbal agreements, as long as they meet the criteria of offer, acceptance, and consideration (something of value exchanged between the parties). While a verbal promise might serve as a contract, it does not necessarily represent an enforceable agreement in all situations since proving the terms and existence of verbal contracts can be difficult. Similarly, although many contracts are documented in writing to provide clarity and evidence of the agreement’s terms, not all contracts must be written to be valid. Additionally, a handshake agreement lacks the formalities of a contract and can be challenging to enforce because it often lacks written evidence or witnesses. Therefore, the definition of a contract as an agreement enforceable by law is both comprehensive and accurate, capturing the essence of how various forms of agreements function within a legal framework.