Which of the following is NOT a requirement of a legally binding contract?

• A. Mutual agreement
• B. Consideration exchange
• C. Profit motive
• D. Legal capacity of parties

Answer: (C)

In order for a contract to be considered legally binding, certain elements must be present, and the profit motive is not one of them. Contracts require mutual agreement, which refers to the parties involved reaching a consensus on the terms of the agreement. This often includes an offer and acceptance where both parties understand and agree to the terms.

Consideration is also essential in a legally binding contract; this means that something of value must be exchanged between the parties. It can be money, services, goods, or a promise to perform or refrain from performing a specific act.

Additionally, the legal capacity of the parties is crucial. This means that those entering into the contract must have the legal ability to do so, typically requiring them to be of legal age and mentally competent.

The presence of a profit motive, while often a goal for one or both parties in a business agreement, is not a requirement for the contract to be valid. Contracts can exist even if one or both parties do not profit from the arrangement, thus distinguishing it from the essential elements of mutual agreement, consideration, and legal capacity.