New York State Private Investigator Practice Exam

What is a contract?

1. An agreement to commit a crime

2. A verbal promise between parties

3. A legally enforceable agreement to do or not do something

4. An informal understanding between friends

The correct answer is: A legally enforceable agreement to do or not do something

A contract is fundamentally a legally enforceable agreement between parties to do something or refrain from doing something. This means that the terms of the contract are recognized by law, and if one party fails to fulfill their obligations, the other party has the right to seek legal remedies. In the context of contracts, enforceability is a critical aspect because it ensures that both parties are held accountable for their commitments. The contract must include essential elements like mutual consent, consideration (something of value exchanged), a lawful object, and the capacity of the parties to enter into the agreement. The other options do not fulfill the criteria of a contract. An agreement to commit a crime is illegal and thus cannot be enforced by law. A verbal promise might not always meet the requirements for enforceability, especially if it lacks consideration or doesn't meet the legal standards of written contracts when required. An informal understanding between friends lacks the necessary elements of formality and intention to create legal obligations, which are key components of a valid contract.