Contract Forms Midterm
What is the statute of limitations for a written real estate contract in Texas?
4 years
What does NOT constitute unauthorized practice of law? Writing in special provisions that the Tenant has an option to purchase in a Realtor lease Adding a time is of the essence clause Putting in a provision prohibiting the buyer from assigning the contract offer Advising a buyer or seller to consult with an attorney when legal question
Advising a buyer or seller to consult with an attorney when legal question
What legal contract forms may a real estate licensee use? Forms prepared by the property Forms prepared by an attorney Forms promulgated for use by the Texas Real Estate Commission All of the above
All of the above
Which of the following documents may show that a corporation is in good standing? Good Standing Certificate from the Comptroller Articles of Incorporation and the Bylaws Certificate of Incorporation
All of these documents do
A contract term could be interpreted by reasonable minds in one of two ways - and the rules of construction don't help - what concept best describes this situation?
Ambiguity
Which of the following is the simplest valid way that the earnest money contract can state the names of the parties when the property to be sold is owned by the ChiliTex corpoation?
ChiliTex, Inc.
What does the four corners doctrine say?
Every provision of a contract must be reviewed in the light of all others
Which contract has been fully performed? Executory contract Executive contract Executed contract Execution contract
Executed contract
What forms can brokers and salespersons not use? TREC promulgated forms Trial use "voluntary" forms from the Broker-Lawyer Committee Attorney prepared forms for the Texas Association of Realtors Forms prepared by a committee of licensees within the brokerage office
Forms prepared by a committee of licensees within the brokerage office
What rule of contracts prevents single provisions of the contract from being taken out of context?
Four Corners Doctrine
What word best defines the difference between fraud and mistake?
Fraud involves intent, mistake does not
Which of the following are among the requirements that must be met to get exemplary damages in Texas? Fraud or malice Heavy loss Unknowing Omission Gross Negligence
Fraud or malice
What is the rule of contract law that governs how to properly include initials by both sides to provisions that are hand written into the contract in order to make them enforceable?
Interlineations and deletions
The history of the Broker-Lawyer Committee and the applicable Attorney General opinions express what view towards the licensee's filling in the blanks on a TREC promulgated form?
It does not constitute the unauthorized practice of law
How is the broker-lawyer committee made up?
It is made up of 6 attorneys, and 6 brokers and 1 public member
When can a contract offer be terminated? t must be the result of changed circumstances It must have a set termination date to end before acceptance It may be terminated anytime by the offeror before acceptance by the offeree It is terminated after seven days by the statute of frauds
It may be terminated anytime by the offeror before acceptance by the offeree
What does NOT make a contract unenforceable in and of itself? It lacks reasonable certainty It is sought to be enforced after the statute of limitations has run It is an agreement to agree It was put on older version of a TREC form
It was put on older version of a TREC form
Which of the following examples is probably the worst (not per se incorrect, just not good) way to fill in the parties section of an earnest money contract? John Smith et ux John Smith and wife Mary Smith Naerok Realty Inc. Bob Jones, a single man
John Smith et ux
What doctrine most specifically affects the validity of a contract? The doctrine of res judicata Mutual mistake of material fact Only TREC regulations control the legal validity of any TREC contract The doctrine of res ipsa loquitur
Mutual mistake of material fact
What is not a legal exception to the use of TREC forms by licenses? Homebuilder prepared forms Property owner prepared forms Federal Government prepared forms Neutral third party forms
Neutral third party forms
What are some other names for "mutual assent" in forming a contract? (read all the choices) Offer and acceptance Meeting of the minds Mutual agreements
Offer and acceptance Meeting of the minds Mutual agreements All of the above
Which of the following might lack "reasonable certainty" for contract purposes? A misspelled party name in some blanks but not others The contract is sent over in a .pdf format instead of by FAX or a mailed original Putting "market" rate of interest instead of an actual number Use of a term of the trade, like "LIBOR + 2%" instead a detailed LIBOR definition
Putting "market" rate of interest instead of an actual number
A person who signed a contract for the corporation lacked the formal and proper authority to do so. Later however, the corporation board saw that it was a super good deal and quickly voted to approve the contract. If the contract is found valid, it would be by what doctrine?
Ratification
Once a contract is complete and signed, what doctrine requires amendments and addenda to have "like formalities" to those involved in the creation of the contract?
Rules of modification
What is consideration for contracts?
Something of value exchanged by the parties to support the contract
Which remedy involves a court order to perform the contract as agreed? (Buyer must buy, or seller must sell)
Specific Performance
What law requires real estate sales contracts to be in writing?
Statute of Frauds
Which of the following examples has the fewest drawbacks and is therefore the most acceptable method of specifying the parties in paragraph one of a real estate contract? Susan May Tompkins, a single woman "Current Owner" Mr. and Mrs. Smith Mr. and Mrs. Smith
Susan May Tompkins, a single woman
Multiple offers are presented for the purchase of seller's house in a short time. What rule applies on which offer can be accepted?
The seller can accept whichever offer they deem best under all consideratins
What do we usually mean by the term multiple offers?
The seller is almost simultaneously presented with more than one contract offer
What is true about the time to perform the obligations spelled out in a TREC contract? They are governed by hard and fast deadlines They lack a time is of the essence clause so there is flexibility to uphold the contract There is no such thing as a "reasonable time" - it's either statutory or in the contract If a TREC form time limit is passed it's a dead deal period regardless of notice of breach
They Lack a time is of the essence clause so there is flexibility to uphold the contract
What must be done to addenda to make them a part of the contract?
They need to be referenced as an addendum within the main contract
What doctrine are the courts likely to apply sparingly? Unenforceable as a matter of public policy Void due to illegality of the transaction Valid despite defects due to public policy The statute of limitations to stop lawsuits
Unenforceable as a matter of public policy
When should specific performance be granted?
When damages are not an adequate remedy
When can a broker strike out or add a provision to a contract?
When it conforms the instrument to what a party dictates
Can a mutual exchange of e-mails, with only e-signed contracts, create a valid, binding contract?
Yes due to the Uniform Electronic Transactions Act
What is an executory contract?
a contract that has yet to be fully performed
Who is most likely to arrange the sale of property from an estate when a person dies without a will?
a dully appointed administrator
absolutely essential to a valid name for a party on a Texas Earnest Money Contract?
a last name and a first name a first and middle name a first initial or name and a last name
Which of the following is organized in a similar manner to a corporation?
a limited liability company
the three tests for a fixture?
adaptation annexation intention
If five people buy a house without any formal agreement among themselves, then how will they normally hold title?
as tenants in common
When is the last time that a seller may legally remove a fixture without agreement by the other party to a TREC sales contract?
before signing the contract
Which of the following is a fixture that is listed on the contract form? blinds freezer dryer washer
blinds
Which of the following is a fixture but NOT specifically listed on the contract forms? bricks screens shutters blinds
bricks
How should earnest money be handled when completing paragraph 3 of the TREC forms?
do not put it anywhere i n paragraph 3
How should closing costs be dealt with when completing paragraph 3 of the TREC forms?
dont put it anywhere in paragraph 3
Which of the following is a fixture but NOT specifically listed on the contract forms? door knobs valances hot tub curtains and rods
door knobs
Who sells the house out of an deceased person's estate when a well-drafted Texas Will for the estate has been probated?
duly appointed executor
How can property owned by a person acting under an assumed name state the name of the owner in the parties blank on the contract? either neither by stating just the assumed name by stating BOTH the owner's natural name and the d/b/a
either
How do you indicate "and husband" in Latin?
et vir and wife is: et ux
Which of the following is NOT a fixture listed on the form? fireplace grate permanently installed outdoor cooking equipment all swimming pool equipment curtains, rods and draperies
fireplace grate
Who normally acts for a limited partnership in buying real estate for the limited partnership?
general partner
What are the two meanings for executed contract?
it has been executed as in terminated or it has been signed
What is the legal status of the first name for a party on a Texas real estate contract?
it is essential to any valid legal name on the contract
What will most likely cause a contract to be void? It is for an illegal purpose There is a missed initial at the bottom of one page The contract sets a price well above market The contract contravene public policy in even a minor way
it is for an illegal purpose
What is the legal status of the middle name for a party on a Texas Earnest Money contract?
its useful and should be used
What doctrine that keeps stale, waited too long, suits out of court does not have a definite time frame?
laches
In paragraph 3.A. of the TREC contract, the blank line to put in a figure for cash (as opposed to 3.B. financing or 3.C. total sales price) includes which of the following? money paid as a down payment from buyer to seller money paid for the closing costs money paid as part of the loan money paid to show good faith
money paid as a down payment for the buyer to seller
Which of the following statements is true regarding homestead and community property? neither both If the homestead is the community property of one spouse, it may be conveyed on the strength of the signature of the spouse who wants to sell it without the need for the other spouse to sign. A title company prefers to see a universal power of attorney instead of a specific power of attorney for just real estate.
neither
Fixtures can be excluded from sale by writing them in on the blank lines of the contract in which part of the contract?
paragraph 2-propert description
Which paragraph in the real estate contract has a checkbox to show whether membership in a homeowner's association is mandatory.
paragraph 6 - title
If the property to be sold is owned by a corporation, how should the parties blank on the contract be filled out?
put just the name of the corporation itself in the blank
What type of business organization involves unlimited personal liability for the investors?
regular partnership
Which of the following is most likely to be classed as a fixture? custom made air conditioner ducts a heavy dining room table a toaster plugged into the wall water in a building's main pond
the custom made article
How should the names of married sellers be shown when selling their Texas homestead?
the full name of both married owners should be shown
Who has first priority on the hot water heater in the house, the hot water heater seller who financed the hot water heater purchase, or a bank construction lender that claims a first lien on all fixtures in the house? the hot water heater seller the bank the title company the broker
the hot water heater seller
What is the simplest way that the real estate contract can state the names of the parties when the property to be sold is owned by a regular partnership?
the name of the partnership
The deal is to buy the house for use as a "crack house" - the premiums are, well really sweet to people involved. A seller wants "out" on the contract (not enough $$) to sell the house - what is the status of the contract?
void
What is the difference between unilateral and bilateral contracts?
A bilateral contract involves a mutual exchange of promises on both sides as consideration
Which of the following would be an executory contract? Any signed contract A contract that has been performed A contract that has yet to be performed in the future A contract between high level executive clients
A contract that has yet to be performed in the future
What is a unilateral contract
A contract with a promise one side non-promissory consideration on the other
What can terminate an offer?
A counter-offer
What does NOT constitute unauthorized practice of law? A licensee adds a "googled" clauses to TREC forms about bankruptcy, death, or divorce A licensee adds a clause that the property must appraise for the sales price A licensee adds a clause to a TREC form special provisions that seller retains minerals A licensee adds a factual statement or business detail in special provisions
A licensee adds a factual statement or business detail in special provisions
What would be an incompetent person who cannot enter into a mutually binding contract?
A minor under the age of 18 A person declared by a probate court to be insane A highly intoxicated person
How does a void contract differ from a voidable one? It does not differ - it's just two words for the same thing Void contracts are those that leave blanks unfilled versus unintended fill-ins A void contract cannot be recognized or enforced A void contract is binding but cannot be enforced for some reason
A void contract cannot be recognized or enforced
Which of the following is NOT parol evidence? Phone notes A written & signed TREC contract Internal memoranda Oral statements
A written and signed TREC contract
What do the TREC rules NOT prohibit licensees from doing relative to contract forms
Complete promulgated forms with the terms of the sale
The seller wrote a provision: move out by New year's Day - what doctrine might apply here to resolve any uncertainty and determine that this means New Year's Day instead of Midnight December 31.
Construed against maker
Which of the following does not terminate an offer? Counteroffer Rejection Continuation of the bargaining process Revocation
Continuation of the bargaining process
What is NOT one of the four essential elements of a contract? Competent parties Legal subject matter Consideration Current date
Current date
What is NOT one of the valid elements for contract? Legal subject matter Consideration Offer and acceptance Date
Date
Which of the following carries the greatest weight with courts? Preprinted contract provisions Typed specific provisions Handwritten contract provisions Oral evidence as to the intent
Handwitten contract provisions
Which is given the highest weight by the courts? Pre-printed form text Text typed in by the parties Handwritten text written by the parties Electronic versions of contracts
Handwritten text written by the parties
The contract fails to specify a sales price - it has "TBD" "to be determined" in the blank for the sales figure. What test might cause this contract to be unenforceable?
If courts cant determine with "reasonable certainty" what its terms are its unenforceable
What doctrine might make it difficult for a contract to enforce a very blurry contract when the parties agree something was agreed on, but disagree as to the details?
Lack of reasonable certainty
Which of the following are agreed in advance damages? Economic damages Liquidated damages Exemplary damages Punitive damages
Liquidated damages
What is the first measure of actual damages if it can be found?
Loss in market value
legal description for a real estate contract?
Lots and Block Metes and Bounds
What is forcing a contract by making threats called?
Menace
What is the danger of e-mailing contract proposals without too much thought?
Mutual exchanges of e-mail documents & statements may constitute a contract
Who writes TREC's forms?
The Broker-Lawyer Committee
Which of the following most closely complies with performance of a contract in legal terms? The court may award specific performance when one side failed to honor their contract The contract has been fully performed by either side in a contract The contract sale has closed The contract is written so that it can perform well when it is signed
The court may award specific performance when one side failed to honor their contract
What is the measure of liquidated damages in the TREC contract?
The earnest money
Which of the following statements is true regarding names The last and first names are essential to the validity of the name of a party on a TREC contract. A tax I.D. written on the TREC form is essential to the validity a TREC contract. The marital status of the parties must be mentioned on a contract . The method of stating the names of the purchasers is not that important
The last and first names are essential to the validity of the name of a party on a TREC contract.
What does a statute of limitations cover in relation to real estate sales contracts?
The length of time after which no suit may be brought to enforce a contract
When is it too long for an offer to survive?
The passage of an unreasonably long time
Which of the following is the least proper? Tom Jones and wife Tom Hinton Jones and Mary Parker Jones, husband and wife Tom Hinton Jones et ux Mary Parker Jones Mary Parker Jones and husband Tom Hinton Jones
Tom Jones and wife
What law governs the validity of electronic real estate sales contracts?
U.E.T.A.
elements of acceptance for contract purposes?
Unconditional Timely Communicated