JD Next Practice Exam

If a proposal is open but subject to a board's approval, what type of agreement is it considered?

1. Unilateral Agreement

2. Conditional Agreement

3. Implied Contract

4. Void Agreement

The correct answer is: Conditional Agreement

A proposal that is open but contingent upon a board's approval is rightly classified as a conditional agreement. This type of agreement indicates that the proposal's acceptance and subsequent obligations are dependent on fulfilling specified conditions—in this case, the approval of the board. Conditional agreements often contain clauses that stipulate specific actions that must be taken or certain events that must occur before the agreement becomes fully binding and effective. In this scenario, the necessity of board approval serves as the condition affecting the enactment of the proposal. Until the board grants its approval, the proposal remains just that—a proposal, lacking enforceability. The other types of agreements mentioned do not fit this definition. A unilateral agreement requires only one party to make a promise or fulfill an obligation, whereas a conditional agreement involves mutual agreement that is contingent on specific outcomes. An implied contract arises from the actions or conduct of the parties rather than from explicit statements, which is not the case here. A void agreement is one that is not legally enforceable for various reasons, such as illegality or lack of capacity; however, an open proposal pending approval does not fall into this category, as there is potential for it to be accepted once the condition is met.