Real Estate Council of Alberta Fundamentals Practice Exam

What does the term 'legal object' refer to in the context of contracts?

1. The legality of the subject matter in the contract

2. The parties' ability to enter into the contract

3. The form the contract must take

4. The financial terms specified in the contract

The correct answer is: The legality of the subject matter in the contract

The term 'legal object' in the context of contracts specifically refers to the legality of the subject matter in the contract. For a contract to be valid and enforceable, its purpose and subject matter must align with the law. This means that the contract cannot involve illegal activities or violate public policy. For example, a contract for the sale of illegal drugs would lack a legal object and, therefore, would not be enforceable in a court of law. The significance of a legal object lies in ensuring that all parties involved are engaging in a lawful agreement. If the subject matter is legal, it provides a foundation for the contract, allowing it to be recognized and upheld by legal systems. In terms of the other options, while the ability of the parties to enter into the contract, the necessary form of the contract, and the financial terms are all critical aspects of contract formation, they do not define the concept of 'legal object.' Instead, they deal with other elements necessary for a contract to be valid. The focus on the subject matter being lawful is key to determining the contract's enforceability.