Lesson 8 Test Flashcards
Which of the following regarding the Property Disclosure Statement (PDS) is TRUE?
(1) Once the PDS is filled out, the licensee is no longer liable for misrepresentations regarding the physical aspects of the property.
(2) The PDS will not form part of the contract of purchase and sale unless so agreed by the parties.
(3) A residential seller who does not fill out a PDS can still list with the multiple listing service, even if the board has adopted the use of the PDS.
(4) It is acceptable for a licensee to accept everything which a vendor includes on the PDS at face
value.
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Which of the following regarding the termination of an agent’s authority is FALSE?
(1) Because the relationship between principal and agent depends upon their mutual consent, either party can terminate the authority at will.
(2) If the principal finds a buyer, and sells the home on his or her own, even though the principal has a listing contract with a licensee, the licensee’s authority is terminated.
(3) The authority of an agent can only be revoked by written notice.
(4) If the principal sells his or her property without the help of the agent, the principal may still be liable to the agent for commission even though the agent’s authority was terminated upon the
sale of the property.
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Vikram is a licensee who obtained a lucrative deal to sell all of the units in a 75-unit townhouse development on behalf of the developer, Ego Developments. The units ranged in price from $150,000
to $305,000. Vikram ordered a huge sign which he erected on the front of the property. The sign displayed a large photograph of a unit, showing a large kitchen-family room. The sign read:
Fabulous townhomes! Two bedrooms and den. Marble foyers, jacuzzi baths and more! These units represent superb value. Priced from $150,000. Contact Vikram at Ego Developments! The unit that was displayed on the picture had a price tag of $289,000, and the $150,000 units had
only one bedroom and no den. None of the units below $200,000 had marble foyers or jacuzzis. Of the 75 units in the development, only 15 were priced below $200,000.
Vikram is being prosecuted under section 52 of the Competition Act.
Which of the following statements is TRUE?
(1) As long as the sign used by Vikram is literally true, there will be no breach of section 52.
(2) An oral representation that a licensee makes to a prospective purchaser does not fall within the
scope of section 52; however, written communication, such as Vikram’s sign, is subject to section 52.
(3) To convict Vikram under section 52, the Crown must prove its case on the balance of
probabilities.
(4) For a representation to offend section 52, the representation must be false or misleading in a
material respect.
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Jay and Caro are the only two sales licensees in a city. In order to maximize the profitability of their businesses, the two licensees decide that they will each control certain parts of the city: Jay will only represent clients west of the railroad tracks, and Caro will only represent clients east of the railroad tracks. They also agree that they will both charge a flat $1,000 commission on every property listed
with their respective firms. Jay and Caro do not tell anyone about their agreement, and they do not put the agreement in writing.
Which of the following statements is TRUE?
(1) Jay and Caro cannot be convicted under section 45 of the Competition Act unless their
agreement is in writing.
(2) Agreeing to only represent clients on a particular side of the city is not an offence under the Competition Act. However, agreeing to charge a $1,000 flat commission is an offence under the Competition Act.
(3) To convict Jay and Caro under section 45, the Crown must prove that the agreement adversely
affected competition in the city.
(4) None of the above
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Which of the following is/are FALSE regarding amendments to a contract of purchase and sale?
A. An amendment does not require consideration or a seal, so long as the original contract is
properly enforceable with good consideration and/or a seal.
B. Re-opening negotiations between the parties will not terminate the original contract if the parties agree that the original contract of purchase and sale is binding until any amendment is finalized.
C. Where the original contract includes a time is of the essence clause, unless the amended contract contains an identical clause, the law presumes that time will no longer remain of the essence.
D. At law, an amendment constitutes a contract to change an already existing and legally
enforceable contract.
(1) A and C only
(2) B and D only
(3) A, C, and D only
(4) A only
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Sandra Seller listed her property with Anson Agent. The property remained on the market for a year but there has not been any interest. In an attempt to attract more interest, Sandra lowers the asking
price by 10%. Anson decides to buy the property, but uses his sister’s name as the buyer and makes an agreement with his sister that she will transfer the property to him after the transaction is complete. He makes no disclosure of his connection with the transaction to Sandra.
Which of the following statements is TRUE?
(1) Sandra can have the transaction set aside, no matter how fair it may appear to have been.
(2) Because the transaction has already been completed, Sandra has no recourse.
(3) Sandra can only recover 25% of the commission paid by her.
(4) Because his sister is listed as the buyer, Anson has no duty of disclosure to Sandra.
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Section 54 of the Law and Equity Act permits a party to a contract which is subject to a condition precedent to waive the condition precedent even though its fulfilment is dependent on the action of a
third party.
Which of the following is NOT a requirement for the operation of this provision?
(1) The condition precedent must benefit only the party waiving its performance.
(2) The waiver must be made within the period allotted for fulfilment of the condition precedent.
(3) The condition may only be waived with the authorization of the third party upon whom its performance was dependent.
(4) The contract must remain capable of being performed without the fulfilment of the condition
precedent.
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Mike wanted to purchase a ten acre waterfront lot on Saltspring Island from Janice. He intended to subdivide the lot into ten 1-acre parcels and to sell nine of the resulting lots to finance the construction of a vacation home for his family on the remaining lot. In order to protect himself, he
made the contract subject to his receiving approval of the subdivision plans from the Island Trust, one of the Gulf Island approving authorities. Mike later found another ten acre parcel which he preferred, and because he had not yet applied for the approval of the subdivision from the Island Trust, he
decided to delay applying for the subdivision in order to use the condition precedent to avoid purchasing Janice’s lot.
Which of the following is TRUE?
(1) Because the contract of purchase and sale between Mike and Janice did not contain a promise that Mike would use his best efforts to satisfy the condition, Mike can successfully use the condition precedent to avoid purchasing Janice’s lot.
(2) Fulfilment of the condition precedent can be waived by Janice so that the approval of the subdivision is not necessary in order for her to ensure that the transaction completes.
(3) If Mike changes his mind and waives the fulfilment of the condition precedent requiring that he receive the Island Trust’s approval, he may be still be liable to Janice for any increased construction costs caused by his delay in obtaining subdivision approval.
(4) Mike is under an implied obligation to use his best efforts to secure performance of the
condition, and therefore Mike cannot use the condition to avoid the contract unless he has failed after using his best efforts to obtain subdivision approval.
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Claude and Mathilde entered into a contract of purchase and sale whereby Claude agreed to sell his property to Mathilde for the price of $100,000. Fifty thousand dollars was to be paid in cash. Claude agreed to carry the balance by way of a mortgage. A term in the contract stated that the contract was
not assignable.
Which one of the following is TRUE?
(1) Mathilde may assign the contract only if she is a guarantor of the mortgage.
(2) The contract is assignable if the assignee is more financially secure than Mathilde, because Claude’s rights would not be prejudiced.
(3) Because 50% of the price is payable by cash, Claude cannot object to an assignment of the contract.
(4) Mathilde is not entitled to assign the contract.
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With respect to the standard form listing agreement, which of the following statements is/are TRUE?
A. A prospective purchaser is entitled to rely upon the terms set out in a listing contract.
B. If a prospective purchaser offers exactly the price and terms set out in the listing contract, the vendor is legally obligated to accept the purchaser’s offer.
C. If a vendor refuses to accept an offer that contains exactly the price and terms set out in the listing contract, the licensee acting for the vendor is nevertheless likely entitled to be paid the commission as if the sale of the property had been completed.
D. A prudent listing licensee who reviews a plan of the property available for inspection in the land
title office can use the plan as a survey of the property.
(1) A, B, and D only
(2) B only
(3) C only
(4) All of the above statements are true.
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A “Norfolk v. Aikens clause” in a contract of purchase and sale is necessary to:
(1) give the conveyancers permission to use the purchaser’s money to clear title.
(2) tie up the property until a condition precedent has been satisfied.
(3) identify the physical characteristics and problems that the property might have.
(4) ensure that the contract is enforceable.
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Preparation is crucial to any negotiation. Three of the following statements regarding preparing for a negotiation are true.
Which one is FALSE?
(1) By preparing a list of all the potential issues that could come up during negotiations, the
likelihood of developing a creative solution is increased.
(2) During preparations, if you can understand the interests of the opposing party and appreciate
why they are seeking what they are, your negotiating position will be strengthened.
(3) An essential step during preparation is to determine possible alternatives to a negotiated solution so that you will know when it is appropriate to walk away.
(4) By prioritizing your issues in order of importance before negotiations take place, you can
successfully achieve your goal: a zero-sum game.
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Yana is a listing licensee who is assisting her client, Gabriel, in the sale of his property in Vancouver. Yana hosts an open house, with a number of potential buyers attending. Which of the following is TRUE with respect to Yana’s disclosure obligations to buyers at her open house?
(1) Yana must provide every buyer who attends her open house with a Disclosure of Representation
in Trading Services form.
(2) Yana must provide every buyer who attends her open house with a Disclosure of Risks to Unrepresented Parties form.
(3) Yana can provide trading services to both Gabriel and a buyer through a dual agency
relationship, as long as both parties are provided with a Disclosure of Risks Associated with Dual
Agency form.
(4) If a potential buyer starts to get into a conversation with Yana about his or her personal information, needs, etc., Yana may have to provide that buyer with both a Disclosure of Representation in Trading Services form and a Disclosure of Risks to Unrepresented Parties
form.
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Joe is Mario’s agent. Joe has acted beyond his authority in agreeing to sell Mario’s horse to Giuseppe for $1,200. The following statements deal with the legal consequences of ratification.
Which one of them is TRUE?
(1) If Mario chooses not to ratify Joe’s action, he could sue Joe for breach of warranty of authority.
(2) If Mario chooses not to ratify Joe’s action, Giuseppe could sue Joe for breach of warranty of authority.
(3) Even if Mario ratifies Joe’s action, Giuseppe can sue Joe for breach of contract.
(4) If Mario chooses not to ratify Joe’s action, Joe can sue Mario for breach of the agency contract.
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Good negotiators will attempt to develop creative ways to exchange resources so that both parties benefit from the agreement. Which of the following is/are FALSE regarding the facilitation of this exchanging of resources?
A. By focusing on the parties’ underlying interests, negotiators can avoid becoming entrenched in, and unwilling to move from, their positions.
B. By making multiple or successive concessions, a negotiator may be inadvertently establishing a
climate whereby the opposing side is LESS likely to participate in the negotiations.
C. “Packaging” issues together is not advisable, as a negotiator is left with fewer potential ombinations of solutions and is LESS likely to come to a mutually satisfactory solution.
D. By deciding on an objective standard prior to discussing potential solutions, the parties are MORE likely to come to a final agreement that both view as fair.
(1) A only
(2) A and B only
(3) C and B only
(4) C only
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