What is the legal effect when all parties agree to the conditions of a contract?

When all parties agree to the conditions of a contract, the legal effect is known as mutual assent. This term refers to the process by which all parties involved comprehend and agree to the contractual terms, indicating that they have a shared understanding and acceptance of the obligations and rights established within the contract.

Mutual assent is a fundamental component of contracts because it signifies that an agreement has been reached and that the involved parties are committed to fulfilling the specified terms. This mutual understanding creates an enforceable agreement, forming the basis for legal obligations arising from the contract.

In contrast, terms like legitimacy and contractual obligation do not accurately capture the core concept of mutual agreement and acknowledgment necessary for a valid contract. Legitimacy may refer to the lawful aspect of something but does not specifically address the mutual agreement of terms. Contractual obligation pertains to the duties each party must perform under the terms of the contract but does not encapsulate the initial agreement process itself. Thus, mutual assent is the most precise term to describe the legal effect of all parties agreeing to the contract conditions.