Question

a written contract is not legally binding until ______.
a. money is exchanged
b. it is signed by all parties involved
c. all requirements of the contract have been fulfilled
d. it is signed by all parties involved and notarized by an authorized notary official

Explanation:

Analyze the question stem

The question asks when a written contract becomes legally binding. A written contract is a formal document that records an agreement between parties.

Evaluate the options

• Option a (money is exchanged): While consideration is a required Contract Element, it does not have to be immediate physical money; a promise to pay or perform is sufficient.
• Option b (it is signed by all parties involved): For a written contract to be executed and become legally binding, the parties must express their mutual assent. In Contract Documentation, this is officially established when all parties sign the document.
• Option c (all requirements of the contract have been fulfilled): Fulfilling requirements is the performance phase, which happens after the contract is already legally binding.
• Option d (it is signed by all parties involved and notarized...): Most standard written contracts do not require notarization to be legally binding, making this option too restrictive.

Formulate the conclusion

Therefore, a written contract becomes legally binding once it is signed by all parties involved, indicating their mutual agreement to the terms.

Answer:

• a. money is exchanged
• b. it is signed by all parties involved (Correct answer)
• c. all requirements of the contract have been fulfilled
• d. it is signed by all parties involved and notarized by an authorized notary official