Certified Professional Public Buyer (CPPB) Practice Test

What does discharge by mutual assent signify in contract law?

1. The termination of a contract by a third party

2. The mutual agreement of all parties to end a contract

3. The illegal dissolution of a contract

4. The expiration of a contract due to time

The correct answer is: The mutual agreement of all parties to end a contract

Discharge by mutual assent in contract law signifies that all parties involved in the contract have reached a mutual agreement to terminate the contract. This concept relies on the idea that both parties willingly consent to end their obligations and responsibilities outlined in the contract, thereby releasing each other from any further performance or liabilities. This mutual agreement can occur through formal documentation or a verbal agreement, illustrating a collaborative decision-making process between all parties. It emphasizes the nature of contracts as voluntary agreements where the parties maintain control over their commitments, allowing them to decide collectively to dissolve their partnership as needed. The other options do not accurately reflect the essence of mutual assent. The first option regarding third parties does not involve the primary parties of the contract being in agreement. The third option mischaracterizes the situation by suggesting an illegal act is involved in the dissolution, which wouldn't apply to lawful mutual agreement. Finally, the fourth option refers to expiration due to time rather than the voluntary termination by the parties involved, which is not what mutual assent encompasses.