Nevada Timeshare License Practice Exam

What do you call an agreement between two or more parties to do or not do something?

1. Contract

2. Negotiation

3. Agreement

4. Understanding

The correct answer is: Contract

A contract is recognized as a legally binding agreement between two or more parties where each party commits to specific obligations, which can involve doing something or refraining from doing something. Contracts are enforceable by law, meaning that if one party fails to meet their obligations, the other can seek legal remedies. This definition emphasizes the formal nature of a contract, which distinguishes it from other choices. While negotiation refers to the process of discussing terms to reach a mutual agreement, it does not itself represent a finalized commitment. Similarly, the terms agreement and understanding do not imply the same legal enforceability or specific obligations that a contract does; they are often more informal arrangements without the legal backing that characterizes a contract. Thus, the essential element that defines a contract is the binding nature of the commitments made by each party, which is why it is the correct answer.