What is an arrangement called where each party receives an advantage in exchange for their obligations?

An arrangement where each party receives an advantage in exchange for their obligations is referred to as an onerous contract. This type of contract involves mutual obligations, meaning that both parties have something to gain and something to give. In such agreements, the consideration – the value exchanged – is not only present but is essential for the contract's validity, demonstrating that both sides are agreeing to fulfill certain responsibilities in return for benefits.

This contrasts with other types of contracts like gratuitous contracts, where one party receives a benefit without giving something in return, and thus, no mutual obligations exist. Consensual contracts refer more broadly to agreements formed by the mutual consent of parties, and while they can include onerous arrangements, they aren't limited to those where each party receives a benefit. Implied contracts arise from actions rather than explicit agreements and do not necessarily guarantee that both parties will gain an advantage.

In short, the correct option highlights the essence of contracts where obligations and advantages are interdependent, aligning with the principle of reciprocity in binding agreements.