C1U7 Contracts

Question 1

A 17-year-old can contract as an adult if she:

a. is living away from her parents
b. is emancipated
c. is an orphan
d. has an adult cosign with her

Answer 1

b. is emancipated

Question 2

The owner of a one-person shoe repair shop is:

a. a sole proprietor
b. a partner
c. an executor
d. an administrator

Answer 2

a. a sole proprietor

Question 3

Mary persuaded her elderly Aunt Agnes to buy a grossly overpriced condominium. Mary knew the price was too high but she received a commission on the sale from the seller. Aunt Agnes may complain of:

a. actual fraud and undue influence
b. negligent misrepresentation
c. constructive fraud
d. commercial frustration

Answer 3

a. actual fraud and undue influence

Question 4

The contract Haji Ababe accepted states a purchase price “as appraised on May 12, 2016 by Mike Morton, MAI.” Based on this provision, the contract is:

a. void
b. voidable
c. unenforceable
d. enforceable

Answer 4

d. enforceable

Question 5

Can a broker enforce an oral listing agreement for his neighbor’s home?

a. Yes
b. No
c. Possibly
d. Only if he did not have a contract form handy

Answer 5

b. no

Question 6

When both parties agree to cancel a contract, they effect:

a. a recission
b. a release
c. a novation
d. a reformation

Answer 6

a. a recission

Question 7

Todd made an offer for the Brown residence, and the Browns accepted the offer. On reconsidering, Todd decided to back out of the deal, and the Browns agreed to let him do so. Todd and the Browns then signed:

a. a novation of the purchase contract
b. an agreement rescinding the purchase contract
c. an assignment of the purchase contract
d. an agreement reforming the purchase contract

Answer 7

b. an agreement rescinding the purchase contract

Question 8

Which is NOT a way to terminate a contract?

a. Recission
b. Release
c. Verification
d. Novation

Answer 8

c. Verification

Question 9

Lonnie and Karen have a contract to buy the Santos house. Following a four-day rainstorm, the Santos house was pushed off its foundation by a mudslide and is now resting about halfway over a ravine. The contract probably is:

a. discharged because performance is impractical
b. still in effect
c. discharged because performance is impossible
d. renegotiable at the discretion of the seller

Answer 9

c. discharged because performance is impossible

Question 10

If a buyer’s performance of her sales contract becomes economically impractical, she should:

a. cancel the contract unilaterally
b. ask that the contract be terminated
c. claim the purchase is a mistake
d. tear up the contract

Answer 10

b. ask that the contract be terminated

Question 11

Failure to perform a contract is:

a. a recission
b. a breach
c. a novation
d. a reformation

Answer 11

b. a breach

Question 12

Drew signed a contract to sell his farm to George. Drew had second thoughts and refused to sell, but the sale went through anyway. How did this happen?

a. George threatened Drew.
b. George received a court order for a specific performance of the contract.
c. Once signed, a contract cannot be terminated.
d. Drew increased the purchase price.

Answer 12

b. George received a court order for a specific performance of the contract.

Question 13

The time period in which a lawsuit can be brought is set by:

a. the equal dignities rule
b. the statute of frauds
c. the statute of limitations
d. the probate court

Answer 13

c. the statute of limitations

Question 14

The statute of limitations for an action based on a written real estate contract is:

a. unlimited
b. 2 years
c. 4 years
d. 20 years

Answer 14

c. 4 years

Question 15

The rule for preprinted contracts is:

a. handwriting takes precedence only over printing
b. printing takes precedence over typing
c. handwriting takes precedence over both typing and printing
d. typing takes precedence over handwriting

Answer 15

c. handwriting takes precedence over both typing and printing

Question 16

A property description including the words “250 acres, more or less” is:

a. fatally defective.
b. not definite enough.
c. sufficient if reasonably close to the exact acreage.
d. incomplete without a metes and bounds description.

Answer 16

c. sufficient if reasonably close to the exact acreage.

Question 17

A well-drafted real estate purchase contract will include provision for:

a. the buyer’s possession of the property
b. the financing terms
c. proration of property expenses
d. all of these

Answer 17

d. all of these

Question 18

Unless the seller provides the necessary documentation, part of the proceeds of a sale of real property must be withheld for federal tax purposes as provided by:

a. the FHA
b. Fannie Mae
c. FIRPTA
d. the IRS

Answer 18

d. the IRS

Question 19

Liquidated damages paid on default by the buyer of a single-family residence who intended to occupy the dwelling cannot exceed what percentage of the purchase price?

a. 1%
b. 3%
c. 7%
d. 10%

Answer 19

b. 3%

Question 20

A seller received an offer of $610,000 for his house. His asking price is $635,000. The seller countered with $625,000. If the buyer rejects the counteroffer, may the seller accept the $610,000 offer?

a. yes
b. no
c. yes, if he does so within 24 hours
d. only if he redrafts the original offer

Answer 20

b. no