Contracts and Sales Multistate Bar Practice Exam

Which of the following is a requirement for a valid contract to satisfy mutuality?

1. The unilateral promise of one party

2. Conditional promises not within the promisor's control

3. Both parties must have the right to cancel

4. General promises with no specific output requirements

The correct answer is: Both parties must have the right to cancel

For a contract to satisfy the requirement of mutuality, both parties must provide consideration and have reciprocal obligations that create a binding agreement. This means that there needs to be an expectation that both parties will perform their duties under the contract, ensuring a mutual exchange. In option C, the stipulation that both parties must have the right to cancel reinforces mutuality by highlighting the necessity of reciprocal rights and obligations. When both parties have the ability to cancel, it indicates that neither party is entirely bound without the other being similarly committed, which is critical to forming a valid contract. Mutuality ensures that there is a balance in the contractual relationship; both parties should have the ability to enforce and possibly dissolve their obligations. Without this balance, the contract may become one-sided and unenforceable. The other choices do not reflect the mutual nature of contracts. A unilateral promise from one party lacks the necessary reciprocal obligation. Conditional promises that depend on factors outside the promisor's control can lead to uncertainty, affecting enforceability. Lastly, general promises without specific output requirements can result in ambiguity, undermining the certainty required for a valid contract.