Contract Law

Question 1

Define bilateral contract:

Answer 1

Promise for a promise

Question 2

A unilateral contract is a:

Answer 2

Promise for a performance

Question 3

4 essential elements of any contract:

Answer 3

1- Mutual Agreement
2- Consideration
3- Capacity/competency
4- Legal purpose

Question 4

According to the Statute of Frauds (which has nothing to do with defining fraud), which of the following contracts do NOT have to be in writing to be enforceable:

a. Purchase of a primary residence for $87,000
b. A lease agreement for 2 years
c. Purchase of a used motorcycle for $895
d. An agreement to hire a gardener for six-months

Answer 4

D

Question 5

T/F If the agent and the seller know the roof leaks, and the buyer never asks about it, they do not have to reveal that information to the buyer.

Answer 5

False

Question 6

Partial Performance

Answer 6

In a contract dispute; all parties agree to just leave things as they are.

Question 7

. In a contract dispute situation, if all parties agree to a “contract to end the contract” (everyone returns to their original position) this is an example of:

Answer 7

Rescission

Question 8

Define Specific Performance

Answer 8

In a contract dispute situation, if one party sues asking the court to make the other do as he/she agreed

Question 9

A money adjustment for actual losses is called _______.

Answer 9

damages

Question 10

“Subject to” clauses in CONTRACTS are also known as:

Answer 10

Contingency

Question 11

“Subject to” clauses in DEEDS are also known as:

Answer 11

Habendum

Question 12

The seller changed the date of closing before signing and returning the offer to the agent. This would constitute an acceptance.

Answer 12

False

Question 13

To sign a contract is to __________ it. The person who signs is called a(n) ________.

Answer 13

Execute, Signatory

Question 14

In an executed contract, all its terms have been:

Answer 14

Performed

Question 15

A contract which is still in process, and is not in default is:

Answer 15

Executory

Question 16

A void contract lacks one or more of the essential elements. It is binding on ____________ of the parties.

Answer 16

None

Question 17

T/F A valid contract contains all essential elements. It is binding on all parties to the contract.

Answer 17

True

Question 18

You know the basement leaks, but say “Oh, no the basement doesn’t leak at all.” This is an example of:

Answer 18

Positive fraud

Question 19

You did not purposely deceive, but with reasonable care the problem could have been avoided. This is an example of:

Answer 19

Constructive Fraud

Question 20

When they know the basement leaks, but the agent and seller say nothing & the buyer doesn’t ask about the basement. This is an example of:

Answer 20

Negative Fraud

Question 21

An offer can be withdrawn at any time up to ____________. There is no acceptance until the acceptance has been ____________ to the offeror.

Answer 21

Acceptance, Communicated

Question 22

A clause providing for a predetermined money settlement for anticipated defaults (such as the earnest money) is called a __________ damages clause

Answer 22

Liquidated

Question 23

All contracts are assignable, without the approval of the other party, except for those involving _________ __________ (which includes Agency), or those that specifically prohibit it (such as a “Due on Sale” clause in a loan).

Answer 23

Personal Services

Question 24

A contract exists between Abel & Baker. Abel substitutes Chan in his place with the approval of Baker, and Abel is released from all liability. This is called ________.

Answer 24

Novation

Question 25

When all dates are firm and must be met, the contract has a time is of the essence clause. Violation of deadlines creates a ________________________ contract.

Answer 25

Voidable

Question 26

Which of the following is a bilateral contract?

a. Option
b. Listing
c. REPC (Real Estate Purchase Contract)

Answer 26

C. REPC

Question 27

T/F. An agent brought the sellers an offer at exactly the price and terms specified
in the listing agreement. The sellers don’t want to sell. They still owe a commission.

Answer 27

True

Question 28

T/F. The Real Estate Commission sets the legal rate of commissions for Utah

Answer 28

False

Question 29

A listing where the seller wants a specific amount of money, and the broker keeps everything over that amount as commission is called a ___ _______ and is _______ in Utah.

Answer 29

net listing, Illegal

Question 30

The concept that says the agent who first took the buyer to the property earns the commission is called:

Answer 30

To and through

Question 31

The idea that says the agent who sets in motion an uninterrupted chain of events leading to the closing earns the commission is:

Answer 31

Procuring Cause

Question 32

T/F An Option is a contract giving a potential buyer the right to buy or not to buy a property. It must contain a specific time period, the purchase price, the terms of the sale, and the consideration. The option consideration must be non-refundable.

Answer 32

True

Question 33

An option is considered a _______ contract.

Answer 33

Unilateral

Question 34

A listing agreement is a contract between the:

Answer 34

Broker and the Seller

Question 35

A REPC is a contract between the:

Answer 35

Buyer and the Seller

Question 36

When the seller lists with several brokerages, but will pay commission only to the one who finds a buyer first, that is a(n) _________ listing.

Answer 36

Open

Question 37

. A listing where there is only one listing contract with one brokerage, but if the sellers find their own buyer they do not owe a commission, is:

Answer 37

Exclusive Agency Listing

Question 38

When the seller owes a commission regardless of who finds the buyer, that listing is a(n):

Answer 38

Exclusive Right to Sell

Question 39

The seller can retain the right to sell to specific buyer(s) without paying a commission by putting _________ in the listing agreement.

Answer 39

Exclusions

Question 40

If the sellers did not want to take the property off the market, but were willing to give the person asking for the option the first chance at the property, they might use a ____ __ ____ _______.

Answer 40

Right of First Refusal