Unit 9 Basic Contract Law

Question 1

To be enforceable, contracts for the purchase and sale of real estate would need all of the following EXCEPT
A mentally capable parties that understand the terms of the contract.
B earnest money deposit that accompanies the contract.
C mutually acceptable terms of the agreement.
D to be in writing and signed by all parties to be charged.

Answer 1

B earnest money deposit that accompanies the contract.

Question 2

A real estate license gives the broker the right to
A draft offers to purchase for a client.
B fill in the blanks on pre-printed standard forms.
C act as a principal to the contract.
D perform as a notary public.

Answer 2

B fill in the blanks on pre-printed standard forms.

Question 3

The injured party in a real estate transaction with the right to a suit for specific performance is typically the
A broker.
B buyer.
C title company.
D lender.

Answer 3

B buyer.

Question 4

To be enforceable, a contract must be entered into by a person who is at least
A 16 years old.
B 18 years old.
C 21 years old.
D 25 years old.

Answer 4

B 18 years old.

Question 5

A contract is said to be bilateral if
A one of the parties is a real estate broker.
B the contract has yet to be fully performed.
C only one party to the agreement is bound to act.
D all parties to the contract are bound to act.

Answer 5

D all parties to the contract are bound to act.

Question 6

During the period of time after a valid real estate sales contract is created, but before title actually passes, the status of the contract is
A void.
B executory.
C executed.
D unilateral.

Answer 6

B executory.

Question 7

A buyer is under contract but would rather let her friend buy it. Unless the contract prohibits it, the friend can take over the buyer’s obligation by the process known as
A assignment.
B substantial performance.
C subordination.
D mutual consent.

Answer 7

A assignment.

Question 8

All of the following persons would have the potential of creating a voidable contract EXCEPT
A a seller that was taking strong pain medication after surgery.
B a seller that drank a bottle of champagne prior to signing the contract.
C a buyer that does not read well.
D a buyer that will turn 18 after closing the transaction.

Answer 8

C a buyer that does not read well.

Question 9

A traveler orders a meal in a restaurant. She is obligated to pay for the meal through what kind of contract?
A Express
B Implied
C Voluntary
D Executed

Answer 9

B Implied

Question 10

A seller is under contract to convey ownership of a property to a buyer. The seller changes his mind, and the buyer sues for specific performance. What is the buyer seeking in the lawsuit?
A Money damages
B New contract
C Deficiency judgment
D Conveyance of the property

Answer 10

D Conveyance of the property

Question 11

In which of the following situations has reality of consent been reached?
A Seller signed sales contract at gunpoint.
B Buyer’s spouse threatened divorce if buyer did not buy property.
C Listing agent lied about completion dates of recreational amenities.
D Seller lied about her motivation for selling.

Answer 11

D Seller lied about her motivation for selling.

Question 12

A buyer submits an offer to purchase property through the use of his exclusive buyer’s agent. After the buyer’s agent has delivered the offer to the listing agent at the other firm, the buyer calls and asks the buyer’s agent to cancel the offer since he has located a different property that he likes better. The buyer’s agent cannot revoke the offer if the
A listing agent has already presented the offer to the seller.
B seller has already signed the offer but has not told anyone.
C listing agent has sent an email to the buyer’s agent saying that the seller signed the offer.
D seller signed the offer after making one change about removing a ceiling fan.

Answer 12

C listing agent has sent an email to the buyer’s agent saying that the seller signed the offer.

Question 13

A contract states that closing will take place on or before June 22 of this year and “time is of the essence.” If the buyer cannot close until June 26,
I the buyer has breached the contract.
II the seller can potentially terminate the contract.
A I only
B II only
C Both I and II
D Neither I nor II

Answer 13

C Both I and II

Question 14

A builder/seller advertising a selling bonus to any selling agent is an example of
A a voidable contract.
B an unilateral contract.
C a bilateral contract.
D an open listing contract.

Answer 14

B an unilateral contract.

Question 15

A buyer makes an offer to a seller. The seller in this transaction would be described as the
A grantee.
B minor.
C assignee.
D offeree.

Answer 15

D offeree.

Question 16

In a standard sales contract, several words were crossed out or inserted by the parties. To eliminate future controversy as to whether the changes were made before or after the contract was signed, the usual procedure is to
A write a letter to each party listing the changes.
B have each party write a letter to the other approving the changes.
C redraw the entire contract.
D have both parties initial or sign and date in the margin near each change.

Answer 16

D have both parties initial or sign and date in the margin near each change.

Question 17

Linda and John are attending an auction to purchase 35 acres of farmland. They were the high bidders, even though their bid was very low. The type of auction Linda and John attended was an auction
A without reserve.
B run by an online auction service.
C without a licensed auctioneer.
D without a licensed listing broker in attendance.

Answer 17

A without reserve.

Question 18

Under the statute of frauds, all contracts for the sale of real estate must be
A originated by a real estate broker.
B on preprinted forms.
C in writing to be enforceable.
D accompanied by earnest money deposits.

Answer 18

C in writing to be enforceable.

Question 19

If, upon the receipt of an offer to purchase a property subject to certain conditions, the seller makes a counteroffer, the prospective buyer is
A bound by the original offer.
B bound to accept the counteroffer.
C bound by whichever offer is lower.
D relieved of the original offer.

Answer 19

D relieved of the original offer.

Question 20

A broker has found a buyer for a seller’s home. The buyer has indicated in writing a willingness to buy the property for $1,000 less than the asking price and has deposited $5,000 in earnest money with the broker. The seller is out of town for the weekend, and the broker has been unable to inform the seller of the signed document. At this point, the buyer has signed
A a voidable contract.
B an offer.
C an executory agreement.
D an implied contract.

Answer 20

B an offer.