Ch. 8 HW (Contracts)

Question 1

If a purchaser breaches a valid and enforceable sales contract, the seller may at his/her option:

Answer 1

A. declare the contract forfeited and retain as liquidated damages any payments received from the buyer.
B. rescind the contract and return any payments received from the buyer.
C. sue for specific performance.

Question 2

How my a contract be discharged?

Answer 2

1.unilateral rescission by a defrauded
purchaser.
2. novation.
3. supervening illegality.

Question 3

Frances, an elderly lady, entered into a contract to sell her home when her unscrupulous nephew Bruce took unfair advantage of his relationship with her. Frances:

Answer 3

may rescind the contract if she chooses.

Question 4

A novation can be any of the following EXCEPT:
substitution of a new contract for an existing contract.
B. substitution of one party for another.
C. substitution of a new obligation to discharge a former obligation.
D. substitution of a new agreement by one party against the wishes of the other party.

Answer 4

substitution of a new agreement by one party against the wishes of the other party.

Question 5

An executory contract is one in which:

Answer 5

something remains to be done by one or both parties.

Question 6

An implied contract is one in which:

Answer 6

the parties’ agreement is shown by their acts and conduct.

Question 7

Which of the following will normally control the contents of a deed?

Answer 7

The contract for sale

Question 8

What does The Statute of Limitations refer to

Answer 8

time.

Question 9

A broker has listed a property for a client who lives in another state. When an offer is received from a cooperating agent, it is FAXED to the owner. He then FAXES back a signed acceptance to his agent who in turn delivers it to the buyer’s agent. When did it become a binding agreement?

Answer 9

When it was received by the buyer’s agent

Question 10

Broker Mike Stevens tells Andy Malcolm that certain land is zoned for industrial use. Although Stevens thought he was correct, the land was actually zoned for residential use. Malcolm relied on Stevens’ representation and signed a contract to purchase the land.

Answer 10

Malcolm may rescind the contract.

Question 11

When there is a conflict between the wording of portions of a sales contract, which of the following takes precedence over all other wording?

Answer 11

Handwritten

Question 12

Which of the following parties receives equitable title?

Answer 12

Vendee

Question 13

A land contract is:

Answer 13

a financing arrangement where the purchaser pays regular installments of principal and interest to the seller while the seller retains title.

Question 14

An enforceable sales contract must include all but which of the following?
A. Reality of consent
B. An earnest money deposit
C. Be in writing
D. Mutual assent

Answer 14

An earnest money deposit

Question 15

Mary Jo Davis gives Steve Calvin an option to buy her farm within the next year for $500,000. Calvin agrees to pay $10,000 for the option. Regarding this transaction, which of the following is correct?

Answer 15

Calvin does not have the right to use the property during the option year.

Question 16

If a seller deposits the deed with an escrow agent but the seller dies before it is delivered to the purchaser, the transfer of title becomes effective on the date the deed was deposited into escrow. This procedure is allowed by:

Answer 16

the doctrine of relation back.

Question 17

In order to enter into a contract to buy real estate, a corporate official who signs the agreement must obtain the authority from:

Answer 17

a corporate resolution passed by the Board of Directors.

Question 18

Seller Evans, having signed a contract for the sale of her home, verbally promised the buyer that the living room would be freshly painted. When the buyer moved in, the buyer discovered that the room had not been painted as promised. Under these circumstances:

Answer 18

the buyer has no legal recourse.

Question 19

Before being notified of the seller’s acceptance, the prospective purchaser may:

Answer 19

withdraw the offer and receive a full refund of the earnest money deposit.

Question 20

The provision in a sales contract that obligates the seller to repair a leaking basement one year after closing is called:

Answer 20

a survival clause.