What defines an onerous contract?

An onerous contract is characterized by the fact that both parties engage in mutual obligations, where each party stands to gain a benefit in exchange for their specific duties or contributions. This definition aligns with the choice indicating that each party benefits in return for their obligation. In such contracts, the obligations and benefits are typically intended to balance out, meaning that while one party might be providing a service or payment, they are also receiving something of value in return.

In contrast, a contract where no advantages are exchanged would not be considered onerous, as there would be no mutual benefit. Similarly, a contract involving unequal values may suggest an imbalance that could lead to disputes, but it does not inherently constitute an onerous contract since the key element of reciprocal benefit is missing. Additionally, a contract based on luck or uncertain events is typically categorized as a gamble rather than an onerous contract, as the benefits in these situations are contingent rather than guaranteed or reciprocal.

Therefore, the essence of an onerous contract lies in the mutual exchange of benefits and obligations, making the correct choice a reflection of this principle.