Leasing License Practice Exam

Which term refers to a mutual agreement to buy or sell?

1. Contract

2. Bargain

3. Covenant

4. Stipulation

The correct answer is: Bargain

The term that accurately refers to a mutual agreement to buy or sell is a contract. A contract is a legally binding document that outlines the terms and conditions between parties involved in a transaction. It signifies that both parties have consented to the specific terms that facilitate the exchange of goods, services, or any other assets. While the term "bargain" might suggest negotiation or an agreement on terms, it does not convey the formal and legally binding aspect that a contract does. A bargain can refer to informal understandings or deals that may not hold up under legal scrutiny, whereas a contract ensures that both involved parties have clear rights and obligations. Covenant typically denotes a formal agreement or promise within a contract, often found in real estate and lease agreements, but it doesn't inherently convey the action of buying or selling. Stipulation refers to specific conditions or requirements outlined within a contract, but again, it does not encapsulate the broader concept of an agreement to buy or sell. Therefore, the correct term in this context is contract, as it captures the essential elements of a mutual agreement to engage in a transaction.