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California Real Estate Principles > Contracts Basics > Flashcards

Contracts Basics Flashcards

0
Q

A presentation or proposal for acceptance to form a contract.

A

Offer

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1
Q

The rejection of an original offer that becomes a new offer.

A

Counter offer

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2
Q

Something of value such as money, a promise, property or personal services.

A

Consideration

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3
Q

An offer by one of the parties to carry out his or her part of the contract.

A

Tender

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4
Q

The law that requires contracts to be in writing.

A

Statute of limitations

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5
Q

The relinquishment or refusal to accept a right.

A

Waiver

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6
Q

The person transferring a claim, benefit, or right in property to another.

A

Assignor

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7
Q

A court action brought to compel a party to carry out the terms of a contract.

A

Specific performance

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8
Q

The contract in which obligation to perform exists on one or both sides.

A

Executory contract

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9
Q

The canceling of an offer to contract by the person making the original offer.

A

Revocation

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10
Q

Party to whom a lease is assigned or transferred.

A

Assignee

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11
Q

Mutual consent taken to repeal a contract either by mutual consent of the parties or by one party when the other party has breached a contract.

A

Recession

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12
Q

The party making an offer.

A

Offeror

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13
Q

The substitution by agreement of a new obligation for an existing one.

A

Novation

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14
Q

Parties declare the terms and put their intentions in oral or written terms.

A

Express contract

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15
Q

When a promise is given to both parties with the exception of performance by the other party, it is known as a(n) _____ contract:

A. Unilateral
B. Bilateral
C. Implied
D. Express

A

B. Bilateral

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16
Q 
A contract signed under duress is:
A. Void
B. Voidable
C. Illicit
D. Enforceable
A

B. Voidable

17
Q

A minor cannot hire a real estate broker using a listing agreement because a minor:
A. Can disaffirm the contract
B. Is legally incapable
C. Is incapable of making an adult decision
D. Cannot do so without parental improvement

A

B. Is legally incapable

18
Q 
All of the following are necessary for a valid contract except:
A. Sufficient writing
B. Genuine consent
C. Lawful object
D. Capable parties
A

A. Sufficient writing

19
Q

All of the following are necessary for a valid contract except:
A. Payment of money
B. Genuine consent
C. Lawful object
D. Adequate mental capacity of the contracting parties

A

A. Payment of money

20
Q 
The following are necessary elements to create a valid contract except:
A. Consideration
B. Acceptance
C. Offer
D. Performance
A

D. Performance

21
Q

The essential element needed to create a binding employment contract for the sale of any right, title, or interest in real property is a(n):
A. Written instrument
B. Written authorization to accept offers on the property
C. Written agreement as to the amount of commission
D. Authorization to accept a deposit

A

A. Written instrument

22
Q 
A written contract takes precedence over oral agreements. This principle is expressed by the:
A. Statute of limitations
B. Statute of frauds
C. Parol evidence rule
D. Rule of previous evidence
A

C. Parol evidence rule

23
Q 
The relinquishment or refusal to accept a right is known as:
A. Tender
B. Waiver
C. Novation
D. Forbearance
A

B. Waiver

24
Q 
The substitution of an obligation or contract with a new one is called:
A. Rescission
B. Subordination
C. Novation
D. Conversion
A

C. Novation

25
Q

A bilateral contract is:
A. A contract in which a party promises to perform without expectation of performance by the other party
B. An agreement in which each person promises to perform an act in exchange for another persons promise to perform
C. An agreement shown by act and conduct rather than words
D. The agreement which something remains to be performed by one or both parties

A

B. An agreement in which each person promises to perform an act in exchange for the other persons promise to perform

26
Q

Of the following, who would not be considered a legally competent person:
A. Mary, a 20-year-old university student
B. Bob, a 16-year-old emancipated by the court
C. Alice, 17-year-old who is engaged to be married
D. Tom, a 17-year-old who enlisted in the Navy after graduating high school

A

C. Alice, a 17-year-old who is engaged to be married

27
Q

Tom listed his home with broker Barbara. The listing agreement was a standard preprinted form into which Barbara typed the listing information. She typed 90 days as the term of the listing. However, at the listing meeting, Tom change the term of the listing agreement from 90 to 60 days which he wrote in the contract, initialed the change, and sign a contract. After 60 days, Tom told Barbara he was going to list with another broker, but Barbara told him that he had 30 days remaining on his existing listing agreement. Who is correct, broker Barbara or seller Tom:
A. Barbara - type clauses and insertions take precedence over any attached addenda and the preprinted material
B. Barbara - preprinted material and typed clauses take precedence over any attached addenda and handwritten clauses
C. Tom - handwritten clauses takes precedence over the preprinted material but not type written content
D. Tom - handwritten clauses and insertions take precedence over any type written content, attached addenda, and preprinted material

A

D. Tom - handwritten clauses and insertions take precedence over any type written content, attached addenda, and preprinted material

28
Q

What is the commonality of unilateral rescission, performance, and breach:
A. They are methods of creating contracts
B. They are methods of discharging contracts
C. They refer to the statute of frauds
D. Their contract classifications

A

B. They are methods of discharging contracts

29
Q 
How long is the statute of limitations for a contract to purchase a condominium:
A. 3-years
B. 4-years
C. 5-years
D. 10-years
A

A. 3-years

30
Q 
A minor is:
A. an incompetent.
B. someone under 21 years of age. 
C. someone emancipated.
D. someone under 18 years of age.
A

D. someone under 18 years of age.

Hint: Parties entering into a contract must have legal capacity to do so. Almost anyone is capable, with a few exceptions. A person must be at least 18 years of age unless married, in the military, or declared emancipated by the court. A minor is not capable of appointing an agent, or entering into an agency agreement with a broker to buy or sell.

31
Q 
Which of the following could not enter into a contract? 
A. Non-citizen of the U.S.
B. Emancipated minor
C. 17 year old veteran
D. 6 year old child
A

D. 6 year old child

Hint: A minor is not capable of appointing an agent, or entering into an agency agreement with a broker to buy or sell. Brokers dealing with minors should proceed cautiously and should seek an attorney’s advice. A contract with a minor is considered voidable by the minor.

32
Q 
A contract in which the parties declare the terms and put their intentions in words, either oral or written is known as a(n): 
A.  bilateral contract.
B.  unenforceable contract.
C.  express contract.
D.  executed contract.
A

C. express contract.

Hint: A contract may be an express contract, in which the parties declare the terms and put their intentions in words, either oral or written.

33
Q

A valid contract between buyer and seller exists when the:
A. buyer signs the deposit receipt.
B. buyer is notified of the seller’s acceptance.
C. offer is accepted by the seller.
D. broker is notified of the seller’s acceptance.

A

B. buyer is notified of the seller’s acceptance.

Hint: In a valid contract, all parties must mutually agree. Mutual consent (or mutual assent), is sometimes called a meeting of the minds. It is an offer by one party and acceptance by the other party.

34
Q

Terry and Ben made an offer to buy a duplex. The seller did not accept their offer, but did make a counteroffer. Meanwhile, Terry and Ben found a triplex they liked better and decided to make an offer on it, which was accepted. Which of the following is true.
A. Terry and Ben must notify the seller of the duplex of their desire to cancel their offer.
B. Terry and Ben must honor their first offer to purchase the duplex.
C. Terry and Ben were released from their original offer by the seller’s counteroffer.
D. Terry and Ben must accept the counteroffer to their offer to purchase the duplex.

A

C. Terry and Ben were released from their original offer by the seller’s counteroffer.

Hint: One party must offer and another must accept, without condition. An acceptance is an unqualified agreement to the terms of an offer. The offeree must agree to every item of the offer for the acceptance to be complete. If the original terms change in any way in the acceptance, the offer becomes a counteroffer, and the first offer terminates. The person making the original offer is no longer bound by that offer, and may accept the counteroffer or not.

35
Q 
When force is used to get agreement in accepting a contract, it is called:
A.  duress.
B.  negligence.
C.  tort.
D.  fraud.
A

A. duress

Hint: Use of force, known as duress or menace, which is the threat of violence, cannot be used to get agreement.

36
Q 
Sissy and Matt were paying off a second trust deed on their house, but could not make the last payment on time. They called the lender and requested an extension of time and asked the lender not to start foreclosure proceedings. If the lender agrees not to start an action, it is called:	 
A.  reconveyance.
B.  forgiveness.
C.  forbearance.
D.  default.
A

C. forbearance.

Hint: Forbearance, or forgiving a debt or obligation, or giving up an interest or a right, qualifies as valuable consideration.

37
Q 
Statute of Frauds requires that leases for longer than \_\_\_\_\_ must be in writing.
A.  two years
B.  five years
C.  six months
D.  one year
A

D. one year

Hint: Trust deeds, promissory notes, and leases for more than one year also must be in writing to be enforceable.

38
Q 
Under California law, any person seeking relief for a breach of contract must do so within the guidelines of the Statute of \_\_\_\_\_.
A.  Frauds
B.  Limited Frauds
C.  Frauds and Limitations
D.  Limitations
A

D. Limitations

Hint: Under California law, any person filing a lawsuit must follow the time limits in the statute of limitations. The statute of limitations places a limit on the length of time a plaintiff has to file a lawsuit.

39
Q 
Which of the following is not a remedy for breach of contract
A.  Lawsuit for money damages
B.  Unilateral Rescission
C.  Lateral Rescission
D.  Lawsuit for specific performance
A

C. Lateral Rescission

Hint: A person harmed by non-performance can accept the failure to perform or has a choice of three remedies: unilateral rescission, lawsuit for money damages, or lawsuit for specific performance.

California Real Estate Principles (8 decks)

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