General Education Development (GED) Practice Exam

Which of the following constitutes a binding contract?

1. An agreement signed and dated by one party and one witness

2. An agreement signed and dated by both parties

3. An agreement signed by both parties and witnessed by a third party

4. An agreement signed and dated by both parties and a witness

The correct answer is: An agreement signed and dated by both parties and a witness

A binding contract typically requires an agreement between parties that is clear and enforceable. The correct choice reflects the strongest form of contract validation. When an agreement is signed and dated by both parties, along with the witness's signature, it provides multiple layers of verification. This confirmation from a neutral third party enhances the legitimacy of the agreement, ensuring that both parties understand and consent to the terms outlined. Witnessing adds further credibility, which can be particularly important in legal contexts. In the event of a dispute, the presence of a witness can support claims about what was agreed upon, helping to establish the contract's validity and intent. Therefore, the combination of signatures from both parties, along with a witness, constitutes the most reliable form of a binding contract. Other options may lack one of these critical elements, making them less secure as a formal agreement.