(Ch. 9) Contracts Flashcards

(A) a unilateral contract.
(B) binding only on one party
(C) accepted by performance.
(D) All of the above.

All statements are true

1. A real estate licensee may legally prepare which of the following contracts?

(A) A contract for the sale of a three-family house with no attorney review wording.
(B) A contract for the sale of a vacant one- family lot with no attorney review wording.
(C) A month-to-month apartment lease with no attorney review wording
(D) A six-month lease for a candy store.

Only the property owner or a lawyer may prepare the contracts involving A,B and D.

1. Which of the following is an essential element of any contract?

(A) Written instrument
(B) Words of conveyance.
(C) Consideration.
(D) Acknowledgment.

A is only required for contracts falling within the Statute of Frauds; B is only required in a deed; D is only required to record

1. All of the following are true concerning an option contract EXCEPT:

(A) the optionee can enforce the sale.
(B) the option money is usually forfeited if the purchase is not completed
(C) the optionee must sign the contract.
(D) the optionor cannot require specific performance

Only the optionor must sign

1. Which of the following is NOT a necessary element in the formation of a contract?

(A) Offer.
(B) Consideration.
(C) Acceptance.
(D) Performance

Performance is not essential in forming contract

Generally, a contract between a competent adult and a minor is:

(A) voidable at the option of the minor.
(B) voidable at the option of the adult.
(C) voidable at the option of either party
(D) enforceable.

Only the minor may disaffirm the contract

1. Which of the following parties are NOT competent to enter into a contract?

(A) Minors
(B) Mental defectives.
(C) Drunks.
(D) All of the above.

All lack legal capacity to contract

1. The withdrawal of an offer before acceptance is called:

A) Rescission
B) Revocation
C) Reversion
D) Rejection

Rescission could take place after acceptance. Rejection would be an act of offeree, not offeror

1. A contract made for an illegal purpose is:

A) valid
B) void
C) unilateral
D) voidable

A void contract has no legal force or effect, for example a contract to commit an illegal act.

1. In a sales contract, the offeror is usually:

A) the mortgagee
B) the trustee
C) the vendee
D) the lienee

The vender is the buyer

1. Earnest money may be held in escrow by all BUT ONE of the following:

A) A real estate broke
B) An attorney
C) An escrow agent
D) A real estate salesperson

A salesperson cannot establish a trust account

1. Which of the following is NOT an essential element of contract?

A) Consideration
B) Offer and acceptance
C) Competent parties
D) Earnest money deposit

Earnest money is strongly recommended but is not essential to validity of a contract

1. The transfer of rights under a contract without the release from obligation by the assignor is known as:

A) novation
B) Supercedence
C) assignment
D) succession

If the party transferring rights was released, it would be a novation.

1. Failure to perform of fulfill a contract is termed a:

A) deflect
B) fault
C) breach
D) delinquency

Also call default

1. All BUT ONE of the following results in a termination of an offer to purchase real property:

A) Marriage of buyer
B) Death of buyer
C) Destruction of property
D) Revocation of offer

Marriage will not terminate an offer

1. A person who secured the right to purchase a property at a fixed price for a designated period of time and has paid a consideration for this privilege would own:

A) a lease
B) an agreement to buy
C) an assignment of interest
D) an option

The seller must sell, the buyer does not have to buy

1. X gives Y a check for $4,000 at the time X signs a contract to purchase Y’s real property. The term of the purchase are $95,000 sale price paid as follows: $30,000 in cash from X and $65,000 by the way of a first mortgage for 30 years at 10% interest. Which of the following terms best describes the $30,000?

A) Down Payment
B) Hand Money
C) Earnest money deposit
D) Binder

The $30,000 down payment includes the $4,000 earnest money deposit

1. One of the following is NOT a method by which a contract can be discharged:

A) Divorce of either party
B) Operation of law
C) Earnest money deposit
D) Performance or breach

Divorce will not affect enforceability of a contract

1. When there is a “Meeting Of The MInds” which of the following has (have) been accomplished?

A) Offer and acceptance
B) All elements of the contract have been satisfied
C) Settlement has been held
D) Acknowledgement and delivery

An essential element for a valid contract

1. An optionee, by reason of the option contract:

A) has the right to collect rents during the option period
B) can legally enforce the exercise of the option if the optionor changes his mind about selling
C) can occupy the property during the option period
D) cannot legally enforce the exercise of option if the optionor objects

An optionee does not have the right do any of the things mentioned in A, C, or D

1. A Rescission of a contract:

A) a ratification
B) a return to the status quo
C) an amendment to the terms of a contract
D) an escrow arrangement

Rescission is the act of canceling a contract either by mutual agreement or unilaterally when the other party defaults

1. A seller agreed to sell a tract of land to a buyer and the usual contract was signed by both parties. Before the transaction was completed, the seller learned that a sports complex would greatly increase the value of the property. The seller told the broker to return the buyer’s deposit since he would not honor the contract The buyer refused to accept the return of the deposit and is contemplating legal action. Of the following, the buyer’s least desirable course of action would seem to be:

(A) action for compensatory damages.
(B) unilateral rescission.
(C) action for specific performance.
(D) accept a settlement.

Rescission is generally considered the least desirable remedy for breach of contract

1. In an option contract:

(A) the buyer is bound to buy.
(B) the seller is bound to sell.
(C) a consideration is unnecessary.
(D) the optionee must sign

The seller must sell the buyer does not have to buy

1. A remedy in court which could compel a party to a valid contract to sign a deed is:

(A) specific performance.
(B) foreclosure.
(C) execution.
(D) equity of redemption

Used in real estate because each parcel of land is non homogeneous

1. A portion of a form contract is changed by typing in contrary provisions and initialing by all parties. Which takes precedence?

(A) The printed portion of the contract
(B) The contract is void because of the changes.
(C) The typewritten portion of the form.
(D) The parties may void the contract because of the changes.

Typewritten additions indicate clear intent of parties

1. A contract for the sale of real estate is

(A) an executed agreement.
(B) an expected agreement.
(C) an executory agreement.
(D) an aleatory agreement.

Because a number of things remain to be done, such as payment of purchase price, delivery of deed, etc

1. From the following list, check the statute or act which creates the need for a deed to be in writing:

(A) The Statute of Descent.
(B) The Recording Act.
(C) The Statute of Frauds.
(D) The Statute of Proof of Execution.

Descent deals with distribution of property when owner dies inestate

1. In connection with the sale of real estate, a rider is a(n):

(A) amendment.
(B) person.
(C) lien
(D) contract.

A rider is an amendment or attachment to a contract

1. Which of the following is NOT a remedy available to the parties when a contract is breached?

(A) Unilateral rescission
(B) Court action for specific performance.
(C) Sue for money damages and reimbursement of expenses.
(D) File a criminal complaint

All of the other remedies are available to the party who is not in default

1. When a seller fails to mention the existence of a mortgage on a piece of real estate, but there is such a mortgage:

(A) Seller can compel the buyer to complete the transaction if the seller allows a deduction from the sale price equal to the amount due on the mortgage.
(B) The signing of the contract of sale automatically makes the mortgage void
(C) The buyer has the right to demand a title free and clear of mortgage.
(D) Buyer must take title subject to the mortgage.

Buyer does not have to take title to mortgage property.