Humber/Ontario Real Estate Course 1 Exam Practice

Which situation does NOT meet the criteria for adequate consideration in a contract?

1. Each contract party contributes something of value.

2. The consideration involved must be legal.

3. Insignificant money that severely benefits one party over another.

4. A mutual promise to buy/sell that holds value.

The correct answer is: Insignificant money that severely benefits one party over another.

In a contract, consideration refers to something of value exchanged by the parties involved. For a contract to be valid, there must be mutual consideration, which means each party must give up something of value, whether it's a promise, an act, forbearance, or something else. This exchange ensures that each party is bound to the agreement and provides a basis for the contract's enforceability. In this scenario, option C does not meet the criteria for adequate consideration in a contract because "insignificant money that severely benefits one party over another" implies a lack of fairness or balance in the exchange of consideration. For a contract to be legally enforceable, the consideration provided by each party should be reasonably proportionate and not unduly favor one party over the other. Therefore, this situation does not meet the criteria for adequate consideration in a contract.