Contracts

Question 1

Complies with all essentials of a contract; binding and enforceable on both parties.

Answer 1

Valid

Question 2

Lacks an essential element of a valid contract; has no legal effect.

Answer 2

Void

Question 3

Appears to be valid on the surface but may be disaffirmed because one or he parties signed when a minor, when under duress, or as a result of fraud or misrepresentation.

Answer 3

Voidable.

Question 4

Appears to be valid, but neither party may sue for performance; for example, an oral agreement to pay a commission.

Answer 4

Unenforceable

Question 5

All terms are carried out

Answer 5

Performance

Question 6

Party remains liable, because the contract was not completed exactly as required.

Answer 6

Substantial performance

Question 7

Parties agree to cancel

Answer 7

Mutual agreement

Question 8

Voided by minor or because of fraud or the expiration of the statute of limitations

Answer 8

Operation of law

Question 9

Transfer in writing of rights or interest in a bond, mortgage, lease, or other instrument. Does not relates all liability of the original signor.

Answer 9

Assignment

Question 10

Acceptance by parties to replace an existing contract with a new contract. Release all liability from the original signor.

Answer 10

Novation

Question 11

The failure, without legal excuse, of one of the parties to a contract to perform according to the contract.

Answer 11

Breach of contract.

Question 12

Remedies for breach of the seller defaults:

Answer 12

Rescind or terminate the contract and recover earnest money, due for specific performance, due the seller for damages.

Question 13

Remedies for breach f the buyer defaults:

Answer 13

Declare the contract forfeited, rescind the contract and keep all or part of the deposit as liquidated damages, due for specific performance, and due for damages.

Question 14

Only one brokerage is authorized to act as the exclusive agent of the principal. The seller retains the right to sell the property without obligation to the brokerage, and the brokerage receives a commission only if it’s firm is the procuring cause.

Answer 14

Exclusive agency listing

Question 15

Generally used for leases of retail businesses in shopping malls and may take the form of a gross lease or a net lease.

Answer 15

Percentage lease.

Question 16

Often residential, tenant pays fixed rent and the landlord pays all of the operating expenses for the property.

Answer 16

Gross or fixed lease.

Question 17

Often commercial, tenant pays rent plus a portion of the operating expenses.

Answer 17

Net lease

Question 18

Generally used in the development of commercial property and are for a long term of 50 years or more; tenant leases unimproved land from the owner and constructs a building.

Answer 18

Ground lease

Question 19

Lessee enters into a contract to purchase a property at a later date for a predetermined price and agrees to pay rent during the period in which the property is being rented.

Answer 19

Lease with right to purchase

Question 20

Lessee enters into a contract to rent a property, as well as an option to purchase the property at a later date; the lessee is not obligated to buy the property as in a lease with an obligation to purchase.

Answer 20

Lease with an option to purchase

Question 21

Forms to change the language in either the listing contract or the offer to purchase.

Answer 21

Amendment

Question 22

Statue of frauds requires that a lease for _______ be in writing to be enforceable.

Answer 22

More than one year.

Question 23

Adds further terms and conditions to the approved forms, thus incorporating them into a legal document.

Answer 23

Addendum

Question 24

List prices based on the amount of money the seller will receive if the property is sold, plus the commission. Prohibited in most states.

Answer 24

Net listing

Question 25

Law pertaining to the period of time within which certain actions must be brought to court.

Answer 25

Statute of limitations.

Question 26

States that the property owner will pay the listing broker a commission if, within a specified number of days after the listing expires, the owner transfers the property to someone the broker originally introduced to the owner

Answer 26

Broker protection clause