Chapter 13 True/False

Question 1

A contract is not considered valid unless the parties have a meeting of the minds.

True
False

Answer 1

True: A meeting of the minds means that there is complete agreement about the purpose and terms of the contract.

Question 2

A buyer breaches a contract. One of the seller’s remedies is to keep the earnest money and then sue the buyer for damages.

True
False

Answer 2

False: If a seller chooses to keep a buyer’s earnest money, the seller is agreeing to forego all other remedies and accept the amount of earnest money as the maximum damages for the breach. If the seller wants to pursue a claim for damages in excess of the amount of the earnest money, the seller must return the earnest money to the buyer and file a lawsuit against the buyer for damages.

Question 3

A party fails to perform by a deadline where time is of the essence. The contract is now void.

True
False

Answer 3

False: Failure to perform by a deadline where time is of the essence makes a contract voidable by the non-breaching party. The non-breaching party can choose to void the contract or continue with the transaction.

Question 4

Because contract law is always changing, licensees can give legal advice only when acting as a buyer’s agent.

True
False

Answer 4

False: Licensees can explain contract provisions to the parties and complete a contract on behalf of a party. Licensees cannot give legal advice.

Question 5

To “use a form” means to fill in the blanks of an approved form.

True
False

Answer 5

True: A licensee is obligated to use approved real estate forms when involved in a real estate transaction.

Question 6

A licensee may use an unapproved offer to purchase if a party directs the licensee to use the form.

True
False

Answer 6

False: A licensee is permitted to use department-approved forms, out-of-state real estate forms for purchase of property in another state as long as the licensee is physically in Wisconsin and competent to complete the forms, and forms prepared by governmental agencies for use with government programs. A licensee can also use pre-prepared addenda if an attorney drafted the addenda and is identified on it. For example, licensees can use WRA forms to supplement department-approved forms in a transaction because an attorney drafted the forms and is identified on them.