Chapter 12 Quiz Flashcards
What is the effect on a transaction if a buyer approves a seller’s WB-46 Multiple Counter-Proposal?
A. The seller must accept the multiple counter-proposal before it is binding.
B. The buyer who does not become the primary buyer will automatically be put into secondary position.
C. The first buyer to accept and deliver the multiple counter-proposal back to the seller will become the primary buyer.
D. A binding contract for sale is created.
A. See lines 28-32 of the WB-46 Multiple Counter-Proposal. If the buyer approved the seller’s multiple counter-proposal, it becomes an offer from the buyer to the seller. A seller can choose to accept, reject or counter a buyer’s approved multiple counter-proposal. If the seller accepts the buyer’s approved multiple counter-proposal, it creates a binding sales contract.
Which of the following does NOT apply to the process a buyer uses to provide a notice of defects to a seller?
A. The buyer must deliver the notice to the seller by the deadline for the home inspection.
B. If the seller has a right to cure, delivery of the notice puts the seller in control of the transaction.
C. The notice allows the buyer to negotiate the terms of the offer.
D. A copy of the inspection report must accompany the notice.
C. If an offer gives a seller the right to cure and a buyer delivers a notice of defects, the seller can choose to cure or let the offer become null and void. Parties must provide a copy of the inspection report with the notice, and it must be delivered by the date in the home inspection contingency. A party would not use a notice to negotiate the terms of a sale.
How should a buyer draft a second counter-offer so that the second counter-offer includes the first three items of the first counter-offer?
A. State the terms of the second counter-offer and incorporate the first three items of the first counter-offer by reference.
B. Write a new offer.
C. These provisions cannot be included because the seller rejected them.
D. Reissue the first counter-offer with a multiple counter-offer to incorporate any additional changes.
A. The original offer to purchase and the most recent counter-offer constitute the parties’ entire agreement. Any provisions that the parties want incorporated must be included in each subsequent counter-offer or be incorporated by reference.
A buyer makes a written offer, and the seller changes some of the terms of the offer, signs it and delivers it back to the buyer. What is the status of the offer?
A. It is a contract for sale.
B. It is a rejection of the offer and a presentation of a counter-offer.
C. It is a contract for sale if the buyer initials the seller’s revisions and delivers it back to the seller.
D. It is a contract for sale but does not include the seller’s revised terms.
B. A counter-offer is a rejection of an original offer and the issuance of a new offer. Neither party is bound by the terms of the original offer. The buyer does not have to counter or reject the offer by the offer’s deadline.
How should a party amend a contract for sale?
A. Use an Amendment to Offer to Purchase.
B. Cross out provisions, and initial and date the changes.
C. Draft a new contract.
D. Use an Addendum to the Contract for Sale.
A. Licensees should use a WB-40 Amendment to Offer to Purchase when both parties mutually agree to change one or more of the terms or conditions of an accepted offer.
What is the purpose of the expiration date on line 21 of a seller’s WB-46 Multiple Counter-Proposal?
A. It serves as a safeguard for a buyer because the seller may not cancel before the deadline.
B. It represents the latest time a buyer may return the approved multiple counter-proposal.
C. It indicates that other buyers cannot respond before the deadline.
D. It represents the deadline for any buyer’s counter-offers.
B. Lines 20-21 of the WB-46 Multiple Counter-Proposal state, “This Multiple Counter-Proposal by Seller will expire and be null and void unless an approved copy (see lines 28-30) is delivered to Seller in any manner authorized in the Offer to Purchase on or before …”
A seller counters a buyer’s offer. The buyer rejects the seller’s counter-offer. Before the deadline for binding acceptance in the original offer, the seller accepts and delivers the offer back to the buyer. What is the status of this transaction?
A. The seller has countered the original counter-offer.
B. The buyer is bound by the offer to purchase.
C. A sales contract does not exist.
D. The buyer is bound if the seller personally delivered the original offer to the buyer and not the buyer’s agent.
C. A counter-offer is a rejection of the original offer. A party that makes an offer is relieved of contract obligations created by that offer if a party counters the offer. A seller does not have the ability to accept an offer to purchase after the seller has countered or rejected the offer.
How are WB-44 Counter-Offers numbered?
A. According to the form ID number assigned to that particular counter-offer form.
B. According to how many counters have been made in total by the buyer and seller.
C. According to how many counters have been made by the party.
D. According to the date of the counter-offer.
B. The note at the top of the WB-44 Counter-Offer states that parties should number counter-offers sequentially.
When would a party not use a WB-46 Multiple Counter-Proposal?
A. When a seller would like to suggest modifications to offers.
B. To inform a buyer that the seller is considering other offers.
C. To issue a non-binding proposal to more than one buyer.
D. After binding acceptance.
D. A multiple counter-proposal provides a seller a way to negotiate with several buyers at the same time. It would not be used after binding acceptance because the offer is already a contract for sale. If parties want to change the terms after binding acceptance, the parties should amend the contract.
