Final answer:
The principle ensuring each party has the authority to sign a contract is Legal capacity. It affirms that individuals are legally enabled to make contracts, with contractual rights closely tied to property rights offering legal enforceability. This support from the legal system is crucial for economic growth.
Step-by-step explanation:
The key principle that ensures each party signing the contract has the required authority to enter into the contract is C. Legal capacity. Legal capacity means that the individuals involved are of an appropriate age, sound mind, and not under any disqualification due to, for example, bankruptcy. This aspect of contract law ensures that both Sally and Kimberly are indeed able to understand the contract's terms and conditions and are legally allowed to make such agreements.
Contractual rights are inherently based on property rights, which permit individuals to make agreements regarding the use of their property, with the understanding that they have the backing of the legal system to enforce these contracts in case the other party fails to comply. For instance, the relationship between a surgeon and a patient is governed by an employment contract that gives the surgeon the right to payment after providing services. If the patient fails to pay, this becomes akin to property theft of the services rendered.
In essence, a strong legal system upholds contracts and facilitates healthy economic growth by allowing individuals and businesses to transact confidently, knowing they have legal recourse to enforce the agreements.