Final answer:
Every contract must have the element of consideration, which can be money, goods, services, or forbearance. Borrowing methods like banks and bonds reveal a firm's capability to enter into agreements with consideration. Contractual rights are rooted in property rights and assure legal protection for the parties involved.
Step-by-step explanation:
Every contract must be supported by the element of consideration. Consideration is a legal term that refers to something of value that is exchanged between parties entering into a contract. The consideration must be something of value, and it can be money, services, goods, or even a promise to refrain from doing something, which is also known as forbearance.
While earning significant revenues and profits can make a firm more credible when it promises to pay interest on borrowed money, this credibility does not directly relate to the concept of consideration in a contract. Instead, it relates to the firm's ability to utilise methods such as banks and bonds to raise capital. However, when a firm borrows money, the promise to repay the debt with interest serves as the consideration in the loan agreement.
Contracts are based on property rights and provide parties with the ability to make agreements regarding the use of their property, with legal recourse available if the terms of the contract are not met.