Unit 4: Contracts- The Basics (Quiz)

How long is the statute of limitations for a contract to purchase a condominium?

4 years. The statute of limitations is 4 years for actions on any written contract, which includes most real estate contracts.

Of the following, who would not be considered a legally competent party?

Alice, a 17 year old who is engaged to be married. Parties entering into a contract must have legal capacity to do so. A person must be at least 18 years of age unless married, in the military, or declared emancipated by the court.

A bilateral contract is:

An agreement in which each person promises to perform an act in exchange for another person's promise to perform.

When a promise is given by both parties with the expectation of performance by the other party, it is known as a(n) ________ contract.

Bilateral. A bilateral contract is an agreement in which each person promises to perform an act in exchange for another person's promise to perform.

The substitution of an obligation or contract with a new one is called:

Novation. Novation substitutes one contract for another, by mutual agreement. The intent is to extinguish the former contract and create a new one.

A written contract takes precedence over oral agreements. This principle is expressed by the:

Parol evidence rule. Under the parol evidence rule, when two parties make oral promises to each other, and then write and sign a contract promising something different, the written contract will be considered the valid one.

All of the following are necessary for a valid contract except:

Payment of money. This is correct because consideration is required-not necessarily as money. The following items are essential for a valid contract: capacity, mutual consent, lawful object, and consideration. Genuine consent, lawful object and adequate mental capacity of the contracting parties are required.

The following are necessary elements to create a valid contract, except:

Performance. Performance is not essential to create a valid contract. Consideration, acceptance and offer are required to create a valid contract.

All of the following are necessary for a valid contract, except:

Sufficient writing. A valid contract does not require a sufficient writing. However, according to the statute of frauds, sufficient writing is required for an enforceable real estate contract. The question is asking the valid requirements for a contract not a valid real estate contract.

What is the commonality of unilateral rescission, performance, and breach?

They are methods of discharging contracts. Contracts are discharged by performance, release, assignment, novation and breach.

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 changed the termof the listing agreement from 90 to 60 days which he wrote in the contract, initialed the change, and signed the 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?

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

A contract signed under duress is:

Voidable.

The relinquishment or refusal to accept a right is known as:

Waiver. A waiver is the relinquishment or refusal to accept a right. A tender of performance is an offer by one of the parties to carry out his or her part of the contract. Novation is the substitution, by agreement, of a new obligation for an existing one, with the intent to extinguish the original contract. Forbearance is forgiving a debt or obligation, or giving up an interest or a right.

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):

Written instrument. According to the Statute of Frauds, the employment agreement must be in writing to be enforceable.

A minor cannot hire a real estate broker using a listing agreement because a minor:

is legally incapable. A listing agreement is an employment contract, so all four elements to create a valid contract must be present to be valid. A minor cannot enter into a valid and binding contract because of incapacity. If capacity is lacking, the contract is void from the start.