Which of the following is required for a legally binding contract related to what each party offers?

• A. Capacity
• B. Consideration
• C. Legality
• D. Mutuality

Answer: (B)

The concept of consideration is foundational in contract law and is essential for creating a legally binding agreement. Consideration refers to something of value that is exchanged between the parties involved in the contract. It can take the form of money, services, or other benefits that one party gives to another as part of the agreement.

For a contract to be valid, each party must provide consideration; this demonstrates that they are both entering into the contract with the intention to create mutual obligations. Without consideration, there is no exchange of value, and the contract may be deemed unenforceable, as it lacks the necessary component that confirms both parties' commitment.

In the context of the other options, while capacity (the ability of parties to enter a contract), legality (the necessity for the contract's subject matter to be lawful), and mutuality (the agreement of both parties to the terms) are also important factors in contract formation, they do not specifically address the requirement of what each party offers in the context of consideration. Consideration uniquely highlights the reciprocal nature of the agreement, making it essential for a legally binding contract to be formed.