PRINCIPLES AND PRACTICES CHP 11 Flashcards
Manny and Sally enter into a contract stating Sally will buy Manny’s house for $300,000. Before closing, Manny learns that Sally is 17 years old. As a result, Manny doesn’t want to complete the sale. What is the status of this contract?
A. The contract is void due to fraud.
B. The contract is void due to Sally’s age.
C. The contract is voidable by Manny.
D. The contract is voidable by Sally.
D. The contract is voidable by Sally.
Abe and John enter into an agreement wherein Abe will buy John’s house for the asking price if John will install a new roof and if Abe can qualify for a loan sufficient to cover the purchase. Until the roof is installed and the financing obtained, the contract is said to be
A. executed.
B. executory.
C. rescinded.
D. voidable.
B. executory.
Which is NOT a necessary element for a valid and enforceable contract?
A. consequence
B. contractual capacity
C. lawful objective
D. mutual agreement
A. consequence
Seller Ron signs the offer from prospective buyer Michelle without making any changes. He hands it back to his broker. What element is missing to make this offer a valid contract?
A. communication back to the offeree
B. communication back to the offeror
C. earnest money deposit
D. meeting of the minds
B. communication back to the offeror
When Belva’s toy poodle went missing, she tells her neighbor she’ll give him $500 if he finds and returns her dog. This is an example of a
A. bilateral express contract.
B. bilateral implied contract.
C. unilateral express contract.
D. unilateral implied contract
C. unilateral express contract.
Agent Lori and client Hannah have just signed an open listing agreement, stating Hannah will pay Lori 6.5% commission only if Lori finds a willing and able buyer for her house. What best describes this agreement at this time?
A. express, bilateral, executed
B. express, bilateral, executory
C. express, unilateral, executory
D. implied, bilateral, executed
C. express, unilateral, executory
Ivy is declared incompetent by a court, and her son Dave is her legal guardian. When Dave moves out of state, he asks his brother Don to take over. Don decides to move his mom into his house, and so he lists her house for sale. Would this sale be valid?
A. No, any real estate contract for an incompetent person is automatically void.
B. No, Don has not been designated by a court to handle Ivy’s affairs.
C. Yes, but only if Don gets Ivy’s written permission.
D. Yes, Dave has designated his responsibilities to Don.
B. No, Don has not been designated by a court to handle Ivy’s affairs.
Three months into her one-year lease, Jody is transferred out of town. Her co-worker Lenny wishes to complete the term of her lease, and the landlord is willing to substitute his name on the lease and relieve Jody of liability. This is an example of
A. assignment.
B. novation.
C. rescission.
D. repudiation.
B. novation.
Bud makes an offer to buy Wade’s house. The offer contained a provision limiting the time for acceptance to 48 hours. Wade immediately rejects the offer as inadequate, and his agent communicates the rejection to Bud. After thinking about it, Wade calls his agent again and says, “I’ve changed my mind. I’ll take the offer.” What is the status of Bud’s offer?
A. It is a binding contract now that Wade has accepted it.
B. It is still open because Bud hasn’t formally withdrawn it.
C. It is still open because it still had 24 hours before the deadline.
D. It was terminated when Wade first rejected it.
D. It was terminated when Wade first rejected it.
Upon receipt of an offer to purchase under certain terms, if the seller makes a counteroffer, the prospective buyer is
A. bound by their original offer.
B. bound by the agent’s decision.
C. bound to accept the counteroffer.
D. released from their original offer.
D. released from their original offer.
A licensee receives two offers for their seller client’s property at the same time: One from another licensee in their office, and one from a cooperating brokerage. What should the licensee do?
A. submit both offers at the same time, allowing the seller to decide after looking at all the facts
B. submit the higher offer first; if it is not acceptable, submit the other one
C. submit the offer from their brokerage first and let the seller decide on it before presenting the other offer
D. submit the offer from the cooperating brokerage first and let the seller decide on it before presenting the other offer
A. submit both offers at the same time, allowing the seller to decide after looking at all the facts
When the parties to a contract put themselves back into the same positions they were in before they entered into the contract, the contract has been
A. canceled.
B. performed.
C. rescinded.
D. revoked.
C. rescinded.
Jim signs an offer to buy Emma’s house for $495,000, indicating he wants the subzero refrigerator. She’s happy with the offer but intends to take the refrigerator to her new home. Emma crosses that provision out and signs the offer. Her agent returns it to the buyer. Which statement is TRUE?
A. This is a valid contract since both buyer and seller have signed it.
B. The original offer is invalidated, and the parties need to begin negotiating from the beginning.
C. The original offer is terminated, and Emma has made a counteroffer.
D. Seller Emma can accept Jim’s original offer if he insists on getting the refrigerator.
C. The original offer is terminated, and Emma has made a counteroffer.
A buyer signs a purchase contract, and settlement is scheduled for next month. Two weeks before the transaction closes, she asks to void the contract, indicating that she suffers from schizophrenia and was not taking her medicine when she signed the purchase contract. Is this contract valid?
A. Yes, because a mental disorder does not factor into questions of contractual capacity.
B. Yes, because settlement was scheduled, and the deed was already in escrow.
C. No, because buyers always have the right to rescind a contract prior to settlement.
D. No, because the buyer’s temporary incapacity allows her to rescind the contract.
D. No, because the buyer’s temporary incapacity allows her to rescind the contract.
Harriet and Olive have a valid contract for Olive to buy Harriet’s house. The contract indicates a settlement date of April 30. On April 15, Harriet informs Olive that she no longer wishes to sell the house. Harriet’s action is an example of
A. partial performance.
B. repudiation.
C. substantial performance.
D. a tender offer.
B. repudiation.
