Certified Residential Appraiser Practice Exam

What does mutual assent refer to in the context of contracts?

1. Agreement by physical presence

2. Uncommunicated consent of one party

3. Free and mutual consent communicated by each party

4. Consent given under misunderstanding

The correct answer is: Free and mutual consent communicated by each party

Mutual assent in the context of contracts refers to the process where both parties involved in a contract agree to the terms and conditions presented. This agreement is essential for the formation of a legally binding contract. It is characterized by the free and mutual consent of both parties, meaning that they have communicated their acceptance and understanding of the terms clearly and openly. For mutual assent to be established, there must be a clear offer by one party and an acceptance of that offer by the other party. This mutual agreement ensures that both parties are on the same page, which is crucial for enforcing the contract and preventing misunderstandings later on. The other options do not fully capture this concept. Options discussing physical presence or uncommunicated consent do not reflect the requirement for both parties to actively communicate their agreement. Furthermore, consent given under misunderstanding implies a lack of true mutual agreement, which is contrary to the essence of mutual assent. Therefore, the correct interpretation is that mutual assent involves a free and mutual consent communicated by each party.