Which term describes a legally enforceable agreement between two or more parties?

• A. Exhaustion of administrative remedies
• B. Contract
• C. Third-party beneficiary
• D. Breach of contract

Answer: (B)

A contract is a legally enforceable agreement between two or more parties. For a contract to exist, there must be mutual assent (offer and acceptance), consideration (something of value exchanged), and the parties must have the capacity and legal purpose to form the agreement. In insurance, the policy itself is a contract between the insurer and the insured, outlining the promises, coverages, premiums, and duties of each party. The other terms describe related concepts but do not define the general idea of an enforceable agreement: exhaustion of administrative remedies is about procedural steps in challenging agency decisions; a third-party beneficiary is someone who may gain rights under a contract but isn’t a party to it; and a breach of contract is the failure to perform as promised, which can trigger remedies but is not the definition of a contract itself.