Lesson 10 Quiz – Fundamentals of Contract Law

To be legally enforceable, a valid contract must include

authorized signatures

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mutual consent

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the legal description of the property

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marketable title

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A property owner signed a listing agreement under duress. If the seller contests the legitimacy of the signed contract, the contract may be considered

void

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voidable

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valid

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enforceable

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A seller received an offer from a buyer for $350,000. The seller counter-offered with a different sales price of $375,000. Which statement is true regarding the status of the buyer’s original offer?

The original offer is valid

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The original offer is unenforceable

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The original offer is void

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The original offer is voidable

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Which of the following scenarios is an example of valuable consideration?

A developer builds a three-story home for $750,000

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The daughter inherited a four-acre lot

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The shares of a rental business were transferred to the spouse

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The buyer’s down payment for a house was gifted by the grandparents

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A seller induces a buyer to sign a sales contract for the purchase of a house based on the assurance that the property is less than five years old. The buyer wants to rescind the agreement after learning that the building permit proves that the property is over twelve years old. This contract is

voidable because the buyer’s action did not exbibit good faith

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voidable because the seller’s action did not exhibit good faith

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valid because the buyer should have done due diligence before signing the contract

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void because the contract lacked mutual consent

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Which statute restricts the time period for which an injured party in a contract has the right to rescind or disaffirm the contract?

Statue of validity

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Statue of legal acts

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Statute of limitations

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Statute of frauds

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Contracts to buy, sell, exchange or lease interests in real property must be in writing to be enforceable. This falls under the

statute of frauds

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statute of limitations

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statute of consideration

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statute of contracts

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The buyer submitted an offer to purchase a three-bedroom home below the asking price. The seller counter-offered with a different purchase price. When the seller gave a counteroffer, the seller became the

offeror

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offeree

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lessor

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lessee

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A prospective client received a written agreement that included the property price, commission fees, terms, and the designated agent assigned to service the scope of work. This type of contract is known as

a legal contract

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an implied contract

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an express contract

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an executed contract

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A buyer agreed to purchase a property for $250,000, and the seller agreed to sell the property and convey the title at closing. This agreement is known as

a bilateral contract

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a unilateral contract

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an option contract

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a voidable contract

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Which of the following is an example of an executed contract?

An expired lease contract

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A counteroffer from the seller in a sales contract

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A sales contract contingent on the loan approval

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A sales contract prior to closing

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The aggrieved parties in a breached contract elect rescission as their legal remedy. In this situation the contract is

canceled, and the breaching party must pay for caused damages

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canceled, and parties are returned to pre-contract conditions

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canceled, and the breaching party retains the earnest money

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canceled, and the aggrieved party files a suit for performance

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Three days before the closing, the seller decided not to sell the property. In this situation, the buyer may

submit a claim for novation

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enact the forfeiture clause

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file a suit for specific performance

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file for liquidated damages

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Which of the following is an example of revocation?

The sales contract is canceled by the mutual consent of the parties

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The parties fail to perform contractual obligations

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A new contract is created to replace a canceled contract

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A seller cancels the listing agreement without the broker’s consent

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A breach of contract is a failure to perform according to the terms of the agreement. This is called

rescission

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forfeiture

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void

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default

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When a contract states the total amount due to a damaged party in the event of a breach, the compensation is known as

liquidated damages

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unliquidated damages

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specific performance

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forfeiture

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A suit for _________________ is an attempt to force the defaulting party to comply with the terms of the contract

specific performance

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liquidated damages

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unliquidated damages

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default

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A forfeiture requires the breaching party to give up something, according to the terms of the contract. For example,

The broker may have to return the commission earned if the sales transaction fails to close

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A buyer who defaults on a sales contract may have to forfeit the earnest money deposit

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The seller may have to pay discount points on behalf of the buyer’s loan approval

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The sales contract was canceled by mutual agreement of the parties

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