Unit 7: Review Questions

When both parties agree to cancel a contract, they effect: a. a rescission b. a release c. a novation d. a reformation

a. a rescission

The owner of a one-person shoe repair shop is: a. a sole proprietor b. a partner c. an executor d. an administrator

a. a sole proprietor

Mary persuaded her elderly Aunt Agnes to buy a grossly overpriced condominium. Mary knew the price was too high, but she received a commission on the sale from the seller. Aunt Agnes may complain of: a. actual fraud and undue influence b. negligent misrepresentation c. constructive fraud d. commercial frustration

a. actual fraud and undue influence

To be enforceable, real estate sales agreements must: a. be in writing b. be recorded c. be acknowledged d. contain a granting clause

a. be in writing

Failure to perform a contract obligation is known as a: a. breach b. novation c. rescission d. release

a. breach

Liquidated damage paid on default by the buyer of a single-family residence who intended to occupy the dwelling cannot exceed what percentage of the purchase price? a. 1% b. 3% c. 7% d. 10%

b. 3%

Drew signed a contract to sell his farm to George. Drew had second thoughts and refused to sell, but the sale went through anyway. How did this happen? a. George threatened Drew b. George received a court order for the specific performance of the contract c. Once signed, a contract cannot be terminated d. Drew increased the purchase price

b. George received a court order for the specific performance of the contract

The typical real estate purchase agreement is: a. a unilateral contract b. a bilateral contract c. a voidable contract d. an implied contract

b. a bilateral contract

Failure to perform a contract is: a. a rescission b. a breach c. a novation d. a reformation

b. a breach

Todd made an offer for the Brown residence, and the Browns accepted the offer. On reconsidering, Todd decided to back out of the deal, and the Brown agreed to let him do so. Todd and the Browns then signed: a. a novation of the purchase contract b. an agreement rescinding the purchase contract c. an assignment of the purchase contract d. an agreement reforming the purchase contract

b. an agreement rescinding the purchase contract

If a buyer's performance of her sales contract becomes economically impractical, she should: a. cancel the contract unilaterally b. ask that the contract be terminated c. claim the purchase is a mistake d. tear up the contract

b. ask that the contract be terminated

A 17-year old can contract as an adult if she: a. is living away from her parents b. is emancipated c. is an orphan d. has an adult cosign with her

b. is emancipated

A seller received an offer of $610,000 for his house. His asking price is $635,000. The seller countered with $625,000. If the buyer rejects the counteroffer, may the seller accept the $610,000 offer? a. yes b. no c. yes, if he does so within 24 hours d. only if he redrafts the original offer

b. no

Can a broker enforce an oral listing agreement for his neighbor's home? a. yes b. no c. possibly d. only if he did not have a contract form handy

b. no

When both parties to a contract agree to substitute a new agreement for the present one, this is known as a: a. release b. novation c. rescission d. breach

b. novation

Both parties agree to cancel a contract in the process of: a. reformation b. rescission c. novation d. release

b. rescission

The statute of limitations for an action based on a written real estate contract is: a. unlimited b. 2 years c. 4 years d. 20 years

c. 4 years

A contract that is a promise for a promise is known as a: a. voidable contract b. unilateral contract c. bilateral contract d. void contract

c. bilateral contract

Lonnie and Karen have a contract to buy the Santos house. Following a 4-day rainstorm, the Santos house was pushed off its foundation by a mudslide and is now resting about halfway over a ravine. The contract probably is: a. discharged because performance is impractical b. still in effect c. discharged because performance is impossible d. renegotiable at the discretion of the seller

c. discharged because performance is impossible

The rule for preprinted contracts is: a. handwriting takes precedence only over printing b. printing takes precedence over typing c. handwriting takes precedence over both typing and printing d. typing takes precedence over handwriting

c. handwriting takes precedence over both typing and printing

Performance of a contract may be excused if a party can prove which of the following? a. a better deal elsewhere b. novation c. impracticability of performance d. lack of negotiating skill

c. impracticability of performance

A property description including the words "250 acres, more or less" is: a. fatally defective b. not definite enough c. sufficient if reasonably close to the exact acreage d. incomplete without a metes and bounds description

c. sufficient if reasonably close to the exact acreage

The time period in which a lawsuit can be brought is set by: a. the equal dignities rule b. the statute of frauds c. the statute of limitations d. the probate court

c. the statute of limitations

Which is NOT a way to terminate a contract? a. rescission b. release c. verification d. novation

c. verification

A contract that has no legal effect from its inception is a: a. valid contract b. quasi contract c. void contract d. voidable contract

c. void contract

A well-drafted real estate purchase contract will include provision for: a. the buyer's possession of the property b. the financing terms c. proration of property expenses d. all of these

d. all of these

The contract Haji Ababe accepted states a purchase price "as appraised on May 12, 2016 by Mike Morton, MAI." Based on this provision, the contract is: a. void b. voidable c. unenforceable d. enforceable

d. enforceable

A contract that has yet to be performed is known as an: a. implied contract b. executed contract c. express contract d. executory contract

d. executory contract

Unless the seller provides the necessary documentation, part of the proceeds of a sale of real property must be withheld for federal tax purposes as provided by: a. the FHA b. Fannie Mae c. FIRPTA d. the IRS

d. the IRS

Which of the following is NOT a way to terminate a contract? a. rescission b. novation c. release d. verification

d. verification