Which term describes agreements that legally bind two or more people?

• A. Proposal
• B. Memorandum
• C. Declaration
• D. Contract

Answer: (D)

A contract is a legally binding agreement between two or more people that creates enforceable obligations. For a contract to be valid, there must be an offer, an acceptance, consideration (something of value exchanged), and an intention to create legal relations, along with the parties having capacity and a lawful purpose. This is what makes contracts enforceable by law.

Other terms don’t inherently create binding obligations. A proposal is merely an invitation to negotiate and isn’t binding. A memorandum can be a written record of an understanding but isn’t necessarily binding as a contract. A declaration is a formal statement or assertion, not an enforceable agreement between parties.