Certified Residential Appraiser Practice Exam

Which statement is true regarding the essential elements of bidding in a healthy market?

1. Competent Parties are required

2. Lawful Object is optional

3. Written contract is always required

4. Meeting of the minds is not necessary

The correct answer is: Competent Parties are required

In a healthy market, the statement regarding the necessity of competent parties is true. Competent parties refer to individuals or entities entering into a contract who possess the legal capacity to do so. This typically means that they are of legal age, sound mind, and not disqualified from entering contracts by any applicable law. The presence of competent parties ensures that the bidding process operates fairly and that all participants can understand and fulfill their contractual obligations. A healthy market relies on all participants being capable of engaging in binding agreements; this is fundamental to maintaining the integrity of transactions and fostering trust among parties. Without competent parties, the validity of the agreements made can be challenged, undermining the market's effectiveness. The other statements highlight misconceptions about essential bidding elements. The lawful object is not optional; it must be a key component of any contract, as contracts that involve unlawful purposes are void. A written contract is not always a requirement, as verbal agreements can sometimes be enforceable, depending on the context and jurisdiction. Lastly, a meeting of the minds is crucial in contract law; it signifies that all parties involved have a mutual understanding of the terms and agree to the contract's stipulations, which is vital for the contract's enforceability.