James 12 LA

Voidable means: (A) valid unless set aside by one of the parties. (B) illegal. (C) unconditionally enforceable by either party. (D) valid but unenforceable by either party.

(A) valid unless set aside by one of the parties. Hint: If an agreement is voidable there may be some barrier to the formation of the contract that does not appear on the face of the agreement itself, but that will not make the agreement unlawful under all circumstances. Until one party exercises its right to disaffirm the contract, it is presumptively valid and can be performed

The statute of limitations places a limit on the length of time a plaintiff has to file a lawsuit. What is the time limit to file an action on any written contract? (A) 2 years (B) 4 years (C) 5 years (D) 10 years

(B) 4 years Hint: The statute of limitations places a limit on the length of time a plaintiff has to file a lawsuit. The time limit to file an action on any written contract, which includes most real estate contracts, is 4 years.

Jeff and Marian sign a real estate purchase agreement by which Jeff agrees to buy Marian's house. The contract states that Jeff will deposit $1,000 into escrow upon execution of the agreement and that if the parties are unable to conclude the sale for any reason, Marian will retain the $1,000 as liquidated damages, less the escrow costs to that point. If the results of the termite inspection show that there is damage to the property and Jeff cancels the sale as a result, how is a court likely to treat the $1,000? (A) A court would likely find that the $1,000 payment to Marian is a valid liquidated damages provision. (B) A court would likely find that the $1,000 is invalid as a penalty or forfeiture. (C) A court is likely to split the $1,000 between Jeff and Marian regardless of what their contract says. (D) A court would likely order that the full $1,000 be returned to Jeff because he acted reasonably based on the results of the termite inspection.

(A) A court would likely find that the $1,000 payment to Marian is a valid liquidated damages provision. Hint: Because contract damages are sometimes difficult to ascertain, many contracts include a provision for liquidated damages. Liquidated damages are a sum set forth in a contract that the parties agree in advance will be their maximum exposure if one party or the other breaches the contract. Courts assume that such clauses give the parties certainty regarding their potential legal liability if either side breaches the agreement and consequently usually uphold them.

Jim is in the market for a new house and visits a listed property owned by Alice. After his tour of the property, he sends her a written offer to buy for a few thousand dollars less than her listing price. Alice looks it over and decides that it is a reasonable offer and mails her acceptance to Jim. When she hears nothing for two weeks, she calls him and he tells her, "I never received your acceptance. And I've decided to revoke my offer to buy your house." Alice, however, has a copy of her letter stating her acceptance and the certified mail receipt. The postal service has no record that the letter was delivered, however, even though Alice can prove she mailed it. Do they have a contract? (A) Alice's mailed acceptance created a binding contract even though Jim never received it, according to the "mailbox rule." (B) Alice's mailed acceptance did not create a binding contract because Jim never received it, according to the "mailbox rule." (C) Alice's mailed acceptance did not create a binding contract because too much time has elapsed from the date of mailing. (D) The parties do not have a binding contract, because Jim told Alice he was revoking his offer.

(A) Alice's mailed acceptance created a binding contract even though Jim never received it, according to the "mailbox rule. Hint: The acceptance or a rejection of an offer is deemed to be complete at the moment it is deposited in the mail. The actual receipt of the communication is not required; even if the letter communicating the acceptance or rejection is lost, it is still effective (assuming that the offeree can establish that the acceptance was deposited in the mail and when that deposit took place).

The parol-evidence rule refers to which of the following? (A) It is a rule that bars the introduction of most evidence regarding the oral negotiations of the parties that occurred prior to the execution of a written contract. (B) It is a rule of evidence that prohibits someone who was a party to a contract in which the other party has died from testifying about the meaning of the terms of the agreement. (C) It is a rule that prohibits someone in prison, on probation, or parole from entering into most contracts. (D) It is a rule that prohibits someone who has committed a felony from testifying about why that person entered into a contract.

(A) It is a rule that bars the introduction of most evidence regarding the oral negotiations of the parties that occurred prior to the execution of a written contract. Hint: "Parol evidence" refers to the oral discussions that precede the parties' reduction of those discussions into a written agreement.

What is the commonality of unilateral rescission, specific performance, and reformation? (A) Assignment of a contract (B) Equitable remedies for breach of contract (C) Laches as it pertains to contracts (D) Legal remedies for breach of contract

(B) Equitable remedies for breach of contract Hint: If the assignor wants to be released entirely from any obligation or secondary liability for the contract, it may be done by novation. Novation is the substitution, by agreement, of a new obligation for an existing one, with the intent to terminate the original contract.

What document should an assignor use to be released entirely from any obligations or secondary liability? (A) Assignment (B) Cancellation (C) Novation (D) Revocation

(C) Novation Hint: If the assignor wants to be released entirely from any obligation or secondary liability for the contract, it may be done by novation. Novation is the substitution, by agreement, of a new obligation for an existing one, with the intent to terminate the original contract.

Which is not an example of an express agreement? (A) Al sells his car to Fred for $5,000 and both "shake hands" on the deal. (B) Donna finances the purchase of phone system for her office and signs loan papers. (C) Sally orders a pizza to be delivered. (D) Ted signs a 6-month lease for an apartment.

(C) Sally orders a pizza to be delivered. Hint: In an express contract, the parties declare the terms of the agreement and put their intentions in words, either orally or in writing. When a contract is implied, the agreement is demonstrated by conduct rather than by words.

Which of the following is not an element of a valid contract? (A) Consideration (B) Competent parties (C) Unilateral agreement (D) Mutual consent

(C) Unilateral agreement Hint: The elements of a valid contract are mutual consent, consideration, competent parties, and a lawful object

Paul sends Gary a letter that states, "I offer to purchase your house for $290,000, closing to take place by December 31." Gary writes back, "I accept your offer, but escrow must close before November 30." Which of the following is true? (A) Gary's letter is a counteroffer creating a binding contract (B) Gary's letter is an acceptance creating a binding contract (C) Gary's letter is a revocation that Paul can accept or reject. (D) Gary's letter is a counteroffer that Paul can accept or reject

(D) Gary's letter is a counteroffer that Paul can accept or reject Hint: In order for a contract to be formed, the offeree must accept the offer without making any changes to it. If he does make a change, then the purported "acceptance" has really become a counteroffer.