Chapter 11 Purchase and Sale Flashcards
An amendment to a contract of purchase and sale
(1) is not legally binding on the seller and buyer until finalized in writing and signed by all parties to the original contract.
(2) must be signed by at least the seller and selling licensee who negotiated the original contract.
(3) automatically terminates the contract of purchase and sale.
(4) can be made only before a buyer’s offer is accepted by a seller.
1
A contract of purchase and sale is:
(1) a contract to make a contract.
(2) evidence of intent to be bound, but not enforceable.
(3) a binding contract if properly drafted.
(4) All of the above.
3
Which one of the following is NOT required in a contract of purchase and sale?
(1) the names of the parties
(2) a description of the property being sold
(3) the purchase price
(4) the rate of commission payable
4
Which one of the following statements is correct?
(1) Contracts of purchase and sale can always be assigned.
(2) Contracts of purchase and sale can never be assigned.
(3) Contracts of purchase and sale can only be assigned with the permission of the seller.
(4) Contracts of purchase and sale can be assigned as long as the rights of the other party are not prejudiced.
4
Which one of the following statements is FALSE?
(1) A deposit is held by the brokerage as a stakeholder until the real estate transaction is completed.
(2) Unless a deposit is paid when an offer to purchase is made, there is not a binding contract for purchase and sale.
(3) If a deposit is made by uncertified cheque, the brokerage should only issue a cheque on its trust account when the brokerage knows that the deposit cheque has been honoured.
(4) Once an offer has been accepted, the brokerage may only return the deposit if it has the seller’s written permission.
2
Which of the following is NOT generally required to create an enforceable contract of purchase and sale?
(1) the names of the buyer and the seller
(2) a description of the property being sold
(3) the completed statements of adjustment
(4) the price to be paid in the sale
3
Where a condition precedent is inserted in a contract of purchase and sale, a licensee might also include a “time clause”. Which of the following definitions accurately describes such a clause?
(1) The clause requires the removal of the condition precedent within a reasonable time.
(2) The clause states specifically the date by which the condition precedent must be removed.
(3) The clause permits the seller to require the removal of the condition precedent within a specified time, if a better offer is received.
(4) None of the above three statements accurately describes a “time clause”.
3
Where a buyer under a standard contract of purchase and sale refuses to perform, the seller will NOT have the following remedy:
(1) specific performance.
(2) damages for loss of bargain.
(3) damages relating to the costs of preparing necessary documents.
(4) the forfeiture of a deposit, representing fifty percent of the purchase price, as liquidated damages.
4
A seller refuses to sign a subject removal form to strike out a condition precedent from a contract of purchase and sale. Assuming that the condition was made exclusively for the benefit of the buyer, the agreement is:
(1) binding.
(2) unenforceable.
(3) voidable at the option of the seller.
(4) void.
1
Which of the following actions will protect a seller from an insincere buyer when a condition precedent is inserted in a contract of purchase and sale?
(1) state a time limit by which the condition precedent must be fulfilled
(2) talk to the buyer to ascertain whether he intends to fulfill the condition precedent
(3) insert a clause requiring the buyer to use his best efforts to remove the condition precedent
(4) all of the above
4
Either party to a contract of purchase and sale may assign that contract to another party:
(1) as long as the words “or nominee” or “or assignee” are used to the contract.
(2) as long as the assignment would not prejudice the interests of the other party to the contract.
(3) only if the other party to the contract consents to the assignment.
(4) in any or all of the above situations.
2
Conditions precedent are usually included in contracts of purchase and sale to protect the buyer. However, since conditions precedent can also be abused by buyers, a seller must be protected when a condition precedent is being included in a contract of purchase and sale. Which of the following additions to the contract of purchase and sale is NOT a valid method of protecting a seller’s interests?
(1) A specific time within which the condition must be removed can be included in the contract of purchase and sale.
(2) A clause requiring a Property Disclosure Statement to be filled out can be included in the contract of purchase and sale.
(3) A covenant can be inserted stating that the buyer will use his or her best efforts to satisfy the specific condition.
(4) A time clause can be included which gives the seller the right to demand that the buyer remove the condition precedent within 72 hours.
2
A seller refuses to acknowledge the waiver of a condition precedent from a contract of purchase and sale. Assuming that the condition was made exclusively for the benefit of the buyer and the waiver was made prior to the expiry of the condition precedent, the agreement is:
(1) one which is not binding on either party.
(2) voidable at the option of the seller.
(3) binding.
(4) voidable at the option of the buyer.
3
At common law and unless the agreement stipulates to the contrary, as soon as a contract is signed for the purchase and sale of real property, the risk of loss or damage suffered between the signing of the contract and the completion falls on:
(1) the buyer.
(2) the seller.
(3) the seller’s insurance company.
(4) no one.
1
Which of the following is NOT a requirement for an enforceable contract of purchase and sale?
(1) deposit
(2) description of property sold
(3) names of the parties
(4) description of the price and financing
1
