Chapter 9 Quiz: Contracts

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An offer may be terminated by:

1 point

(A) lapse of agreed period of time.

(B) acceptance of offer.

(D) All of the above.

Clear selection

An option is:

1 point

(A) a unilateral contract.

(B) binding only on one party.

(D) All of the above.

Clear selection

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

1 point

(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.

(D) A six-month lease for a candy store.

Clear selection

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

1 point

(A) Written instrument.

(B) Words of conveyance.

(D) Acknowledgment.

Clear selection

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

1 point

(A) the optionee can enforce the sale.

(B) the option money is usually forfeited if the purchase is not completed.

(D) the optionor cannot require specific performance.

Clear selection

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

1 point

(A) Offer.

(B) Consideration.

(D) Performance.

Clear selection

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

1 point

(A) voidable at the option of the minor.

(B) voidable at the option of the adult.

(D) enforceable.

Clear selection

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

1 point

(A) Minors.

(B) Mental defectives.

(D) All of the above.

Clear selection

The withdrawal of an offer before acceptance is called:

1 point

(A) rescission.

(B) revocation.

(D) rejection.

Clear selection

A contract made for an illegal purpose is:

1 point

(A) valid.

(B) void.

(D) voidable.

Clear selection

In a sales contract, the offeror is usually:

1 point

(A) the mortgagee.

(B) the trustee.

(D) the lienee.

Clear selection

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

1 point

(A) A real estate broker.

(B) An attorney.

(D) A real estate salesperson.

Clear selection

Which of the following is NOT an essential element of a contract?

1 point

(A) Consideration.

(B) Offer and acceptance.

(D) Earnest money deposit.

Clear selection

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

1 point

(A) novation.

(B) supercedence.

(D) succession.

Clear selection

Failure to perform or fulfill a contract is termed a:

1 point

(A) defect.

(B) fault.

(D) delinquency.

Clear selection

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

1 point

(A) Marriage of buyer.

(B) Death of buyer.

(D) Revocation of offer.

Clear selection

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:

1 point

(A) a lease.

(B) an agreement to buy.

(D) an option.

Clear selection

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

1 point

(A) Down payment.

(B) Hand money.

(D) Binder.

Clear selection

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

1 point

(A) Divorce of either party.

(B) Operation of law.

(D) Performance or breach.

Clear selection

When there is a “meeting of the minds” which of the following has (have) been accomplished?

1 point

(A) Offer and acceptance.

(B) All elements of the contract have been satisfied.

(D) Acknowledgment and delivery.

Clear selection

An optionee, by reason of the option contract:

1 point

(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.

(D) cannot legally enforce the exercise of the option if the optionor objects.

Clear selection

A rescission of a contract is:

1 point

(A) a ratification.

(B) a return to the status quo.

(D) an escrow arrangement.

Clear selection

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 properly. 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:

1 point

(A) action for compensatory damages.

(B) unilateral rescission.

(D) accept a settlement.

Clear selection

In an option contract:

1 point

(A) the buyer is bound to buy.

(B) the seller is bound to sell.

(D) the optionee must sign.

Clear selection

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

1 point

(A) specific performance.

(B) foreclosure.

(D) equity of redemption.

Clear selection

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

1 point

(A) The printed portion of the contract

(B) The contract is void because of the changes.

(D) The parties may void the contract because of the changes.

Clear selection

A contract for the sale of real estate is:

1 point

(A) an executed agreement.

(B) an expected agreement.

(D) an aleatory agreement.

Clear selection

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

1 point

(A) The Statute of Descent.

(B) The Recording Act.

(D) The Statute of Proof of Execution.

Clear selection

In connection with the sale of real estate, a rider is a(n);

1 point

(A) amendment.

(B) person.

(D) contract.

Clear selection

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

1 point

(A) Unilateral rescission.

(B) Court action for specific performance.

(D) File a criminal complaint.

Clear selection

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

1 point

(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.

(D) Buyer must take title subject to the mortgage.

Clear selection

Prospective purchasers of property, as evidence of good faith, frequently make a deposit called:

1 point

(A) consideration.

(B) earnest money.

(D) a deferred purchase money trust.

Clear selection

A contract which would permit an investor to purchase or not to purchase a property, as he saw fit, for a stated sum within a limited period of time, is called:

1 point

(A) an assignment.

(B) an option.

(D) an agreement of sale.

Clear selection

In an option, the optionee is the:

1 point

(A) legal owner of record.

(B) prospective purchaser.

(D) assignee.

Clear selection

When a buyer and seller enter into a definite purchase agreement except that no closing date is specified, the contract is:

1 point

(A) void for vagueness.

(B) voidable.

(D) not acceptable.

Clear selection

If, after the signing of the contract for sale of land and before the closing, the seller dies, then:

1 point

(A) the contract is voidable at the option of the seller’s representative.

(B) the contract is voidable at the option of the buyer.

(D) the death of the seller normally does not terminate the contract.

Clear selection

A contract, the terms of which have not been fully performed, is known as:

1 point

(A) an executed contract.

(B) an executory contract.

(D) a bilateral contract.

Clear selection

Which of the following is NOT true?

1 point

(A) Once an agreement of sale is signed, there is no way to avoid completing the transaction.

(B) A sales contract must include a legal description of the property being sold.

(D) A lawful purpose is an essential element of a contract.

Clear selection

When Tom and Nancy sold their home they removed a bar sink prior to the closing. The listing and sales contract did not mention the sink. Which of the following is true?

1 point

(A) The sink was a trade fixture, and removable.

(B) The sink was personal property.

(D) Removal was allowed.

Clear selection

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

1 point

(A) Written instrument.

(B) Consideration.

(D) Date.

Clear selection

Reality of consent may be lacking in a contract due to:

1 point

(A) duress.

(B) misrepresentation.

(D) All of the above.

Clear selection

Acceptance is accomplished when:

1 point

(A) salesperson signs sale contract.

(B) offeree signs sale contract.

(D) broker signs sale contract.

Clear selection

The phrase “time is of the essence” means:

1 point

(A) the lawyer is in a hurry for his client to take possession.

(B) the closing must be held in a hurry,

(D) time is unimportant.

Clear selection

A clause in the contract or a mortgage which requires punctual performance is described as:

1 point

(A) specific performance clause.

(B) time is of the essence.

(D) subrogation.

Clear selection

Assume that a contract to purchase for all cash is signed by the unmarried seller and by Mrs. Smith only as buyer. The method of ownership will be tenancy by the entirety. The contract is:

1 point

(A) enforceable.

(B) void.

(D) unenforceable.

Clear selection

If the buyer withdraws the offer before it has been accepted, the deposit money goes:

1 point

(A) one-half to broker and one-half to buyer.

(B) to the buyer.

(D) to the broker.

Clear selection

John has signed a contract to purchase Vera’s house but the closing will not take place for 90 days. During the 90-day period, John has:

1 point

(A) legal title.

(B) an encumbrance.

(D) equitable title.

Clear selection

After securing an option to purchase Binky’s property, Terry sells the option to Ed. Ed is:

1 point

(A) an assignor

(B) a donee.

(D) an assignee.

Clear selection

A contract of sale cannot exist unless there has been an offer and:

1 point

(A) an assignment.

(B) an assessment.

(D) an acceptance.

Clear selection

A buyer withdraws a written offer before the seller has signed. The broker:

1 point

(A) splits earnest money with seller

(B) gets nothing.

(D) can sue the buyer for damages.

Clear selection

The law which bars legal claims after certain time periods is known as the:

1 point

(A) Statute of Frauds.

(B) Statute of Limitations.

(D) Real Estate Law.

Clear selection

Fire damages a home after the contract of sale is signed by both parties but prior to closing, therefore:

1 point

(A) the party in possession generally bears the risk of loss, according to the terms of the contract.

(B) the seller generally bears the risk of loss, according to the terms of the contract.

(D) the contract is voidable by the seller.

Clear selection

Amos and Bernie have entered into a contract for the sale of Amos’s house. Therefore:

1 point

(A) Bernie now has legal title.

(B) Bernie now has equitable title.

(D) Bernie has legal title, Amos equitable title.

Clear selection

Which of the following information would NOT generally be found in the purchase and sale agreement?

1 point

(A) The closing date.

(B) The type of financing.

(D) The name of the mortgagee.

Clear selection

A real estate seller’s agent has a responsibility to inform her client about:

1 point

(A) The terms of financing.

(B) The form of deposit.

(D) All of the above.

Clear selection

The attorney review clause:

1 point

(A) must be included in all contracts prepared by real estate licensees (except residential leases for less than one year) and in all post-contract addenda or revisions.

(B) must be included in all contracts prepared by real estate licensees but not in any revisions thereof.

(D) cannot be extended by agreement of the parties.

Clear selection

A contract whereby only one party is obligated to perform his obligation to another. 9-235

1 point

Unilateral Contract

Statute of Frauds

Novation

Offer

Clear selection

Written agreement in which buyer agrees to buy certain realty and seller agrees to sell upon terms and conditions set forth therein. Title remains with the seller until terms and conditions are fulfilled; buyer has equitable tide. 14-325

1 point

Dual Contract

Contract

Marketable Title

Land Contract

Clear selection

Addendum to cover supplemental changes to an agreement. 9-242

1 point

Default

Void

Rider

Duress

Clear selection

A remedy which the court will grant in certain cases, compelling the defendant to perform or carry out the terms of a valid, existing agreement or contract. 9-242

1 point

Specific Performance

Rescission Clause

Bilateral Contract

Liquidated Damages

Clear selection

To have no force or effect; that which is unenforceable. 9-236

1 point

Rider

Deposit

Default

Void

Clear selection

Title free and clear of objectionable liens or encumbrances; title which is free from reasonable doubts or defects, which can be readily sold or mortgaged. 8-226

1 point

Revocation

Marketable Title

Closing Statement

Voidable Contract

Clear selection

Valuable consideration, a promise or an act of legal value bargained for and received in return for a promise; good consideration, love and affection. 9-235

1 point

Contingency

Acceptance

Rescission Clause

Marketable Title

Clear selection

Money given by one to another as evidence of good faith: evidence or security for performance of a contract. 9-238

1 point

Default

Option

Duress

Deposit

Clear selection

A legal agreement between competent parties for a consideration to perform or refrain from performing certain acts. 9-235

1 point

Land Contract

Option

Contract

Contingency

Clear selection

Violation of any of the terms or conditions of a contract; default; nonperformance. 9-241

1 point

Meeting of the Minds

Breach of Contract

Executory Contract

Earnest Money

Clear selection

In a contract, a requirement of punctual performance. 9-245

1 point

Time Is of the Essence

Bilateral Contract

Breach of Contract

Meeting of the Minds

Clear selection

A rule of law that specifies that oral or parol evidence may not be introduced in court to contradict what has already been stated in writing, unless such statements are intended to show that a fraud has been perpetrated, that a mistake was made, or to clarify what was meant by the words contained in a contract. 9-240

1 point

Novation

Statute of Limitations

Parol Evidence Rule

Unilateral Contract

Clear selection

A statement of settlement made by a broker or an escrow company that reflects the financial position of the buyer and seller in that particular real estate transaction. 17-355

1 point

Voidable Contract

Closing Statement

Compensatory Damages

Rescission Clause

Clear selection

The amount of money actually lost; the amount that will be awarded by a court in the event of default. 9-241

1 point

Compensatory Damages

Bilateral Contract

Liquidated Damages

Breach of Contract

Clear selection

A contract that is binding, is legally sufficient and authorized by law. 9-235

1 point

Dual Contract

Bilateral Contract

Voidable Contract

Valid Contract

Clear selection

Laws setting forth the period of time in which suit can be brought for a particular act. 9-240

1 point

Statute of Limitations

Unilateral Contract

Competent Parties

Novation

Clear selection

A contract that is fully signed or performed. 9-236

1 point

Valid Contract

Executed Contract

Dual Contract

Executory Contract

Clear selection

A clause occasionally found in an agreement of sale which requires the seller to return all of the buyer's payments less costs and a fair rental value in the event the buyer defaults. 9-281

1 point

Specific Performance

Breach of Contract

Rescission Clause

Closing Statement

Clear selection

Initial payment made by a purchaser of real estate as evidence of good faith. 3-26

1 point

Valid Contract

Acceptance

Earnest Money

Equitable Title

Clear selection

Failure to meet an obligation or promise when due. 9-241

1 point

Duress

Void

Acceptance

Default

Clear selection

A contract which is capable of being adjudged void, but is not void unless action is taken to make it so. Able to be made void. 9-236

1 point

Voidable Contract

Executed Contract

Bilateral Contract

Dual Contract

Clear selection

State law which requires, among other things, that certain contracts relating to real estate must be in writing to be enforceable at law. 9-235

1 point

Statute of Limitations

Parol Evidence Rule

Unilateral Contract

Statute of Frauds

Clear selection

A promise by one party to act in a certain manner provided the other party would act in the manner requested. In a real estate sales contract, the offer to purchase realty according to certain stipulated terms and conditions. 9-236

1 point

Offer

Damages

Unilateral Contract

Statute of Frauds

Clear selection

Voluntary expression by the offeree to be bound by the exact terms of the offer; must be unconditional. 9-236

1 point

Acceptance

Assignment

Unenforceable

Earnest Money

Clear selection

A right given for consideration to purchase or lease a property upon specified terms within a specified time. 9-239

1 point

Optionor

Revocation

Deposit

Option

Clear selection

The indemnity recoverable by an injured party as compensation for the loss suffered through the act or default of another. 9-241

1 point

Assignment

Damages

Novation

Deposit

Clear selection

The one granting the option to another. 9-239

1 point

Option

Counteroffer

Revocation

Optionor

Clear selection

A contract drawn for an illegal purpose. For example, where a buyer and seller enter into a second contract with different terms than those on the original contract to benefit fraudulently from the arrangement. 9-236

1 point

Unenforceable

Voidable Contract

Valid Contract

Dual Contract

Clear selection

Those who are qualified or mentally competent to enter into a contract. 9-238

1 point

Competent Parties

Unilateral Contract

Statute of Frauds

Parol Evidence Rule

Clear selection

Title of a purchaser under a contract of sale or agreement of sale. 14-325

1 point

Marketable Title

Equitable Title

Valid Contract

Voidable Contract

Clear selection

An amount predetermined by the parties to an agreement that will be forfeited as compensation for breach of contract. 9-241

1 point

Closing Statement

Voidable Contract

Liquidated Damages

Compensatory Damages

Clear selection

A contract status in which the contract is not enforceable by court action for some reason. 9-236

1 point

Valid Contract

Dual Contract

Unenforceable

Bilateral Contract

Clear selection

The right of the Real Estate Commission to deactivate a broker or salesperson license for wrongdoing. Revocation is for at least all of the remaining license term. 3-28

1 point

Revocation

Optionor

Marketable Title

Contingency

Clear selection

Unlawful constraint or action against a person, forcing him to perform some act against his will. 9-239

1 point

Rider

Duress

Option

Default

Clear selection

A new offer made in response to an earlier offer. 9-237

1 point

Earnest Money

Counteroffer

Equitable Title

Unenforceable

Clear selection

The method or manner by which a right or contract such as a lease or mortgage is transferred from one person to another. 9-239

1 point

Optionor

Revocation

Acceptance

Assignment

Clear selection

A contract not yet fully performed. 9-236

1 point

Bilateral Contract

Breach of Contract

Executed Contract

Executory Contract

Clear selection

An agreement to cover a down payment for the purchase of real estate as evidence of good faith on the part of the purchaser; shows the receipt of a deposit and outlines the basic terms of the transaction. 9-240

1 point

Binder

Contract

Rider

Option

Clear selection

A contract in which both parties have reciprocal obligations toward each other. 9-235

1 point

Breach of Contract

Bilateral Contract

Voidable Contract

Executory Contract

Clear selection

The one obtaining the option right. 9-239

1 point

Contingency

Option

Assignment

Optionee

Clear selection

A three-party agreement under which one party is released and another is substituted. 14-313

1 point

Offer

Competent Parties

Unilateral Contract

Novation

Clear selection

A condition that must exist for the formation of a valid contract. 9-238

1 point

Meeting of the Minds

Valid Contract

Executed Contract

Breach of Contract

Clear selection

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