Which principle describes the clear understanding between parties needed for a contract?

The principle that describes the clear understanding between parties needed for a contract is known as "Meeting of the Minds." This term refers to the mutual agreement and mutual understanding of the essential terms and conditions of the contract by all parties involved. It signifies that both parties have a shared vision of their agreement, including the obligations and rights that are involved.

A "Meeting of the Minds" is crucial for a contract to be legally enforceable because without this mutual understanding, there can be no true agreement. In legal terms, this ensures that both parties are on the same page about what is expected and what is being promised, creating a solid foundation for the contract.

While "Mutual Assent" is a term that also relates to agreement, it is more commonly viewed as the broader concept referring to the expression of agreement between parties, which leads to the Meeting of the Minds. "Legal Capacity” refers to the ability of the parties to enter into a contract, and “Consideration” pertains to anything of value given in exchange for a promise, neither of which directly addresses the clear understanding required for the parties' agreement.