Contracts Basics

Question 0

A presentation or proposal for acceptance to form a contract.

Answer 0

Offer

Question 1

The rejection of an original offer that becomes a new offer.

Answer 1

Counter offer

Question 2

Something of value such as money, a promise, property or personal services.

Answer 2

Consideration

Question 3

An offer by one of the parties to carry out his or her part of the contract.

Answer 3

Tender

Question 4

The law that requires contracts to be in writing.

Answer 4

Statute of limitations

Question 5

The relinquishment or refusal to accept a right.

Answer 5

Waiver

Question 6

The person transferring a claim, benefit, or right in property to another.

Answer 6

Assignor

Question 7

A court action brought to compel a party to carry out the terms of a contract.

Answer 7

Specific performance

Question 8

The contract in which obligation to perform exists on one or both sides.

Answer 8

Executory contract

Question 9

The canceling of an offer to contract by the person making the original offer.

Answer 9

Revocation

Question 10

Party to whom a lease is assigned or transferred.

Answer 10

Assignee

Question 11

Mutual consent taken to repeal a contract either by mutual consent of the parties or by one party when the other party has breached a contract.

Answer 11

Recession

Question 12

The party making an offer.

Answer 12

Offeror

Question 13

The substitution by agreement of a new obligation for an existing one.

Answer 13

Novation

Question 14

Parties declare the terms and put their intentions in oral or written terms.

Answer 14

Express contract

Question 15

When a promise is given to both parties with the exception of performance by the other party, it is known as a(n) _____ contract:

A. Unilateral
B. Bilateral
C. Implied
D. Express

Answer 15

B. Bilateral

Question 16

A contract signed under duress is:
A. Void
B. Voidable
C. Illicit
D. Enforceable

Answer 16

B. Voidable

Question 17

A minor cannot hire a real estate broker using a listing agreement because a minor:
A. Can disaffirm the contract
B. Is legally incapable
C. Is incapable of making an adult decision
D. Cannot do so without parental improvement

Answer 17

B. Is legally incapable

Question 18

All of the following are necessary for a valid contract except:
A. Sufficient writing
B. Genuine consent
C. Lawful object
D. Capable parties

Answer 18

A. Sufficient writing

Question 19

All of the following are necessary for a valid contract except:
A. Payment of money
B. Genuine consent
C. Lawful object
D. Adequate mental capacity of the contracting parties

Answer 19

A. Payment of money

Question 20

The following are necessary elements to create a valid contract except:
A. Consideration
B. Acceptance
C. Offer
D. Performance

Answer 20

D. Performance

Question 21

The essential element needed to create a binding employment contract for the sale of any right, title, or interest in real property is a(n):
A. Written instrument
B. Written authorization to accept offers on the property
C. Written agreement as to the amount of commission
D. Authorization to accept a deposit

Answer 21

A. Written instrument

Question 22

A written contract takes precedence over oral agreements. This principle is expressed by the:
A. Statute of limitations
B. Statute of frauds
C. Parol evidence rule
D. Rule of previous evidence

Answer 22

C. Parol evidence rule

Question 23

The relinquishment or refusal to accept a right is known as:
A. Tender
B. Waiver
C. Novation
D. Forbearance

Answer 23

B. Waiver

Question 24

``` The substitution of an obligation or contract with a new one is called: A. Rescission B. Subordination C. Novation D. Conversion ```

Answer 24

C. Novation

Question 25

A bilateral contract is: A. A contract in which a party promises to perform without expectation of performance by the other party B. An agreement in which each person promises to perform an act in exchange for another persons promise to perform C. An agreement shown by act and conduct rather than words D. The agreement which something remains to be performed by one or both parties

Answer 25

B. An agreement in which each person promises to perform an act in exchange for the other persons promise to perform

Question 26

Of the following, who would not be considered a legally competent person: A. Mary, a 20-year-old university student B. Bob, a 16-year-old emancipated by the court C. Alice, 17-year-old who is engaged to be married D. Tom, a 17-year-old who enlisted in the Navy after graduating high school

Answer 26

C. Alice, a 17-year-old who is engaged to be married

Question 27

Tom listed his home with broker Barbara. The listing agreement was a standard preprinted form into which Barbara typed the listing information. She typed 90 days as the term of the listing. However, at the listing meeting, Tom change the term of the listing agreement from 90 to 60 days which he wrote in the contract, initialed the change, and sign a contract. After 60 days, Tom told Barbara he was going to list with another broker, but Barbara told him that he had 30 days remaining on his existing listing agreement. Who is correct, broker Barbara or seller Tom: A. Barbara - type clauses and insertions take precedence over any attached addenda and the preprinted material B. Barbara - preprinted material and typed clauses take precedence over any attached addenda and handwritten clauses C. Tom - handwritten clauses takes precedence over the preprinted material but not type written content D. Tom - handwritten clauses and insertions take precedence over any type written content, attached addenda, and preprinted material

Answer 27

D. Tom - handwritten clauses and insertions take precedence over any type written content, attached addenda, and preprinted material

Question 28

What is the commonality of unilateral rescission, performance, and breach: A. They are methods of creating contracts B. They are methods of discharging contracts C. They refer to the statute of frauds D. Their contract classifications

Answer 28

B. They are methods of discharging contracts

Question 29

``` How long is the statute of limitations for a contract to purchase a condominium: A. 3-years B. 4-years C. 5-years D. 10-years ```

Answer 29

A. 3-years

Question 30

``` A minor is: A. an incompetent. B. someone under 21 years of age. C. someone emancipated. D. someone under 18 years of age. ```

Answer 30

D. someone under 18 years of age. Hint: Parties entering into a contract must have legal capacity to do so. Almost anyone is capable, with a few exceptions. A person must be at least 18 years of age unless married, in the military, or declared emancipated by the court. A minor is not capable of appointing an agent, or entering into an agency agreement with a broker to buy or sell.

Question 31

``` Which of the following could not enter into a contract? A. Non-citizen of the U.S. B. Emancipated minor C. 17 year old veteran D. 6 year old child ```

Answer 31

D. 6 year old child Hint: A minor is not capable of appointing an agent, or entering into an agency agreement with a broker to buy or sell. Brokers dealing with minors should proceed cautiously and should seek an attorney’s advice. A contract with a minor is considered voidable by the minor.

Question 32

``` A contract in which the parties declare the terms and put their intentions in words, either oral or written is known as a(n): A. bilateral contract. B. unenforceable contract. C. express contract. D. executed contract. ```

Answer 32

C. express contract. Hint: A contract may be an express contract, in which the parties declare the terms and put their intentions in words, either oral or written.

Question 33

A valid contract between buyer and seller exists when the: A. buyer signs the deposit receipt. B. buyer is notified of the seller’s acceptance. C. offer is accepted by the seller. D. broker is notified of the seller’s acceptance.

Answer 33

B. buyer is notified of the seller’s acceptance. Hint: In a valid contract, all parties must mutually agree. Mutual consent (or mutual assent), is sometimes called a meeting of the minds. It is an offer by one party and acceptance by the other party.

Question 34

Terry and Ben made an offer to buy a duplex. The seller did not accept their offer, but did make a counteroffer. Meanwhile, Terry and Ben found a triplex they liked better and decided to make an offer on it, which was accepted. Which of the following is true. A. Terry and Ben must notify the seller of the duplex of their desire to cancel their offer. B. Terry and Ben must honor their first offer to purchase the duplex. C. Terry and Ben were released from their original offer by the seller’s counteroffer. D. Terry and Ben must accept the counteroffer to their offer to purchase the duplex.

Answer 34

C. Terry and Ben were released from their original offer by the seller’s counteroffer. Hint: One party must offer and another must accept, without condition. An acceptance is an unqualified agreement to the terms of an offer. The offeree must agree to every item of the offer for the acceptance to be complete. If the original terms change in any way in the acceptance, the offer becomes a counteroffer, and the first offer terminates. The person making the original offer is no longer bound by that offer, and may accept the counteroffer or not.

Question 35

``` When force is used to get agreement in accepting a contract, it is called: A. duress. B. negligence. C. tort. D. fraud. ```

Answer 35

A. duress Hint: Use of force, known as duress or menace, which is the threat of violence, cannot be used to get agreement.

Question 36

``` Sissy and Matt were paying off a second trust deed on their house, but could not make the last payment on time. They called the lender and requested an extension of time and asked the lender not to start foreclosure proceedings. If the lender agrees not to start an action, it is called: A. reconveyance. B. forgiveness. C. forbearance. D. default. ```

Answer 36

C. forbearance. Hint: Forbearance, or forgiving a debt or obligation, or giving up an interest or a right, qualifies as valuable consideration.

Question 37

``` Statute of Frauds requires that leases for longer than _____ must be in writing. A. two years B. five years C. six months D. one year ```

Answer 37

D. one year Hint: Trust deeds, promissory notes, and leases for more than one year also must be in writing to be enforceable.

Question 38

``` Under California law, any person seeking relief for a breach of contract must do so within the guidelines of the Statute of _____. A. Frauds B. Limited Frauds C. Frauds and Limitations D. Limitations ```

Answer 38

D. Limitations Hint: Under California law, any person filing a lawsuit must follow the time limits in the statute of limitations. The statute of limitations places a limit on the length of time a plaintiff has to file a lawsuit.

Question 39

``` Which of the following is not a remedy for breach of contract A. Lawsuit for money damages B. Unilateral Rescission C. Lateral Rescission D. Lawsuit for specific performance ```

Answer 39

C. Lateral Rescission Hint: A person harmed by non-performance can accept the failure to perform or has a choice of three remedies: unilateral rescission, lawsuit for money damages, or lawsuit for specific performance.