(Ch. 9) Contracts Flashcards by Kelly Blaze

An offer may be terminated time.

(A) lapse of of acceptance of offer.
(B) acceptance of offer
(C) counteroffer.
(D) All of the above

(D)

Any of these will terminate an offer

How well did you know this?

Not at all

Perfectly

An option is:

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

(D)

All statements are true

How well did you know this?

Not at all

Perfectly

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.

(C)

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

How well did you know this?

Not at all

Perfectly

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

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

(C)

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

How well did you know this?

Not at all

Perfectly

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

(C)

Only the optionor must sign

How well did you know this?

Not at all

Perfectly

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

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

(D)

Performance is not essential in forming contract

How well did you know this?

Not at all

Perfectly

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.

(A)

Only the minor may disaffirm the contract

How well did you know this?

Not at all

Perfectly

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.

(D)

All lack legal capacity to contract

How well did you know this?

Not at all

Perfectly

The withdrawal of an offer before acceptance is called:

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

(B)

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

How well did you know this?

Not at all

Perfectly

A contract made for an illegal purpose is:

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

(B)

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

How well did you know this?

Not at all

Perfectly

In a sales contract, the offeror is usually:

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

(C)

The vender is the buyer

How well did you know this?

Not at all

Perfectly

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

(D)

A salesperson cannot establish a trust account

How well did you know this?

Not at all

Perfectly

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

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

(D)

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

How well did you know this?

Not at all

Perfectly

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

(C)

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

How well did you know this?

Not at all

Perfectly

Failure to perform of fulfill a contract is termed a:

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

(C)

Also call default

How well did you know this?

Not at all

Perfectly

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

(A)

Marriage will not terminate an offer

How well did you know this?

Not at all

Perfectly

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

(D)

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

How well did you know this?

Not at all

Perfectly

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

(A)

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

How well did you know this?

Not at all

Perfectly

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

(A)

Divorce will not affect enforceability of a contract

How well did you know this?

Not at all

Perfectly

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

(A)

An essential element for a valid contract

How well did you know this?

Not at all

Perfectly

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

(B)

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

How well did you know this?

Not at all

Perfectly

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

(B)

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

How well did you know this?

Not at all

Perfectly

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.

Study These Flashcards

(B)

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

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

Study These Flashcards

(B)

The seller must sell the buyer does not have to buy

25. 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

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

26. 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.

27. 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.

28. 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.

29. In connection with the sale of real estate, a rider is a(n): (A) amendment. (B) person. (C) lien (D) contract.

(A) A rider is an amendment or attachment to a contract

30. 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

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

31. 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.

32. Prospective purchasers of property, as evidence of good faith, frequently make a deposit called: (A) consideration. (B) earnest money. (C) collateral security (D) a deferred purchase money trust.

(B) The consideration in a real estate contract is the promise to pay full purchase price.

33. 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: (A) an assignment. (B) an option. (C) a deposit receipt. (D) an agreement of sale.

(B) Typical terms of option contract

34. In an option, the optionee is the: (A) legal owner of record. (B) prospective purchaser. (C) assignor. (D) assignee.

(B) OPTIONEE is potential buyer; optionor is owner

35. When a buyer and seller enter into a definite purchase agreement except that no closing date is specified, the contract is: (A) void for vagueness (B) voidable. (C) enforceable. (D) not acceptable

36. If, after the signing of the contract for sale of land and before the closing, the seller dies, then: (A) the contract is voidable at the option of the seller's representative. (B) the contract is voidable at the option of the buyer. (C) the contract is terminated by operation of law. (D) the death of the seller normally does not terminate the contract.

(D) Death does not normally terminate a contract for the sale of real estate, as it is not an agency agreement

37. A contract, the terms of which have not been fully performed, is known as: (A) an executed contract. (B) an executory contract. (C) a unilateral contract. (D) a bilateral contract.

(B) Executed contract is one in which terms have been completely carried out.

38. Which of the following is NOT true? (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. (C) A sales contract should include a closing date (D) A lawful purpose is an essential element of a contract.

(A) After execution, completion of a contract can be avoided by rescission or mutual assent

39. 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? (A) The sink was a trade fixture, and removable. (B) The sink was personal property. (C) The contract should have listed the sink as "items excluded." (D) Removal was allowed

40. Which of the following is an essential element of any contract? (A) Written instrument. (B) Consideration. (C) Deposit. (D) Date.

(B) A contract does not have to be written, dated or accompanied by a deposit, although all are recommended

41. Reality of consent may be lacking in a contract due to: (A) duress. (B) misrepresentation. (C) mistake. (D) All of the above.

(D) Because there could not be a meeting of the minds

42. Acceptance is accomplished when: (A) salesperson signs sale contract. (B) offeree signs sale contract. (C) offeror signs sale contract. (D) broker signs sale contract.

(B) When offeror signs, it constitutes an offer. When offeree signs, it indicates acceptance and becomes a contact.

43. The phrase "time is of the essence" means: (A) the lawyer is in a hurry for his client to take possession. (B) the closing must be held in a hurry. (C) things required to be accomplished on dates set forth in the agreement must be done on or before those dates. (D) time is unimportant.

44. A clause in the contract or a mortgage which requires punctual performance is described (A) specific performance clause. (B) time is of the essence. (C) performance clause. (D) subrogation.

(B) When a "time is of the essence" clause is included in a contract, all dates in the agreement must be interpreted exactly.

45. 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: (A) enforceable. (B) void (C) voidable. (D) unenforceable.

(A) Mrs. Smith could seek specific performance against the seller in the event of default. The seller could not, however, sue Mr. Smith if Mrs. Smith defaults

46. If the buyer withdraws the offer before it has been accepted, the deposit money goes: (A) one-half to broker and one-half to buyer. (B) to the buyer. (C) to the seller. (D) to the broker.

(B) Because there is no contract.

47. 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 (A) legal title. (B) an encumbrance. (C) no legal interest in the property (D) equitable title.

(D) Vera retains legal title until closing

48. After securing an option to purchase Binky's property, Terry sells the option to Ed. (A) an assignor (B) a donee. (C) a vendor. (D) an assignee

(D) An assignee is someone who receives an assignment

49. A contract of sale cannot exist unless there has been an offer and (A) an assignment. (B) an assessment. (C) an exception. (D) an acceptance.

(D) Offer and acceptance are essential elements of a contract

50. A buyer withdraws a written offer before the seller has signed. The broker: (A) splits earnest money with seller (B) gets nothing. (C) is entitled to her commission. (D) can sue the buyer for damages.

(B) Because there is no contract

51. The law which bars legal claims after certain time periods is known as the: (A) Statute of Frauds. (B) Statute of Limitations. (C) Administrative Procedures Act. (D) Law.

(B) After the statutory period, the creditors are barred from bringing suit to enforce a claim.

52. Fire damages a home after the contract of sale is signed by both parties but prior to closing, therefore: (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. (C) he buyer generally bears the risk of loss, according to the terms of the contract. (D) the contract is voidable by the seller.

(B) In the absence of such a provision, the buyer would bear the risk because of his equitable title.

53. Amos and Bernie have entered into a contract for the sale of Amos's house. Therefore: (A) Bernie now has legal title (B) Bernie now has equitable title. (C) Bernie has no interest until the closing. (D) Bernie has legal title, Amos equitable title.

(B) Buyer has equitable title from time contract is signed until closing. Buyer acquires legal title at closing.

54. Which of the following information would NOT generally be found in the purchase and sale agreement? (A) The closing date. (B) The type of financing. (C) A description of the property. (D) The name of the mortgagee.

(D) All of the information in A, B and C should be included in the contract.

55. A real estate seller's agent has a responsibility to inform her client about: (A) The terms of financing. (B) The form of deposit. (C) The customer's willingness to pay more than originally offered. (D) All of the above.

(D) All of these are material to the transaction

56. The attorney review clause: (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 (C) may be waived by agreement of the parties (D) cannot be extended by agreement of the parties.

(A) The attorney review clause can be extended, but cannot be waived

(Ch. 9) Contracts Flashcards

(56 cards)