Oregon Construction Contractors (CCB) Practice Test

What is a common characteristic of a binding contract?

1. It requires full payment upfront

2. It includes an official notary signature

3. It is supported by mutual agreement

4. It must be written and signed by both parties

The correct answer is: It is supported by mutual agreement

A binding contract is fundamentally characterized by mutual agreement, which means that all parties involved have a shared understanding and acceptance of the terms and conditions laid out in the contract. This agreement is often manifested through an offer made by one party and acceptance of that offer by another party. The essence of a binding contract lies in this mutual consent; without it, the contract lacks the necessary foundation to be enforceable. While some contracts may require full payment upfront or the presence of a notary signature, these elements are not universally applicable to all types of binding contracts. Similarly, while it is often advisable for contracts to be written and signed by both parties to provide clarity and reduce disputes, there are valid oral contracts that can be enforceable if they demonstrate mutual agreement and other necessary elements. Thus, it’s the mutual agreement that serves as the core attribute defining the binding nature of a contract.