Chapter 1: Contracts

Front 1

A contract for an unlawful purpose, such as
the distribution of illegal substances, would
be:

a. valid.
b. void.
c. voidable.
d. unenforceable.

Back 1

B) void

Front 2

The Smithers receive an offer from the
Browns who wish to purchase the Smithers
home. The Smithers accept. The broker for
the Browns is out of town but receives a
telephone call from the Smithers’ broker
informing her of the Smithers’ acceptance.

a. This is still an offer and not yet a
binding contract.
b. The Smithers still have a chance to
change their mind and withdraw
their acceptance.
c. Because of the phone call to
Brown’s broker, there is a binding
contract.
d. The Browns can still withdraw their
offer as they have not received a
signed contract.

Back 2

C) because of the phone call to the browns broker, there is a binding contract

Front 3

Which of the following is FALSE regarding
an open listing?

a. The seller can have several open
listings in effect at any one time.
b. If the broker produces a ready,
willing, and able buyer acceptable
to the seller, the broker is entitled
to a commission.
c. The seller does not offer exclusivity
to the Broker.
d. If the seller finds his own buyer, he
is still obligated for a commission.

Back 3

D) If the seller finds his own buyer, he is still obligated for a commission

Front 4

A 15‐year‐old girl enters into a written
agreement with a dance studio to take
dance lessons. Her contract is:

a. valid.
b. void.
c. voidable.
d. unenforceable.

Back 4

C) voidable

Front 5

Contracts for the sale of real estate or for
personal property over $500 must be in
writing to be enforceable according to the:

a. statute of limitations.
b. statute of liberty.
c. statute of frauds.
d. parol evidence rule.

Back 5

C) statute of frauds

Front 6

The type of contract that was created
purely by the actions of the parties is a(n):

a. implied contract.
b. expressed contract.
c. executory contract.
d. unilateral contract

Back 6

A) implied contract

Front 7

Which of the following is NOT considered
an essential element of ALL contracts?

a. consideration
b. offer and acceptance
c. legality of object
d. in writing and signed

Back 7

D) in writing and signed

Front 8

The Smiths have an agreement with the
Kellys that in the event the Kellys find a
purchaser for their home, the Smiths will
be given a chance to match the purchaser’s
offer and buy the house themselves. This is
a(n):
a. voidable contract.
b. option contract.
c. unenforceable contract.
d. right of first refusal.

Back 8

D) right of first refusal

Front 9

The purchasers have submitted an offer to
the seller which stipulates the buyers must
sell their current house before they can
close on the new one. This is called a(n):

a. addendum.
b. contingency.
c. backup offer.
d. none of these

Back 9

B) contingency

Front 10

The sellers, Bob and Mary Decker, accepted
the offer to purchase from the Nelsons but
the Deckers wish to stay in the property for
six months after closing in exchange for the
payment of rent. This condition of the
agreement is called a(n):

a. sale‐leaseback.
b. estate for years.
c. contingency
d. all of these

Back 10

D) all of these

Front 11

Tenant Tom has not paid his rent in two
months and avoids all contact with
Landlord Lynn. Frustrated, Lynn enters the
apartment when Tom is at work and puts
all of Tom’s personal property to the curb.
Additionally, Lynn changes the locks. This
is:

a. legal since Tom is in breach of his
lease.
b. justified as Tom is more than 30
days late.
c. Illegal as it is a constructive eviction.
d. unethical as Tom will have no
shelter.

Back 11

C) illegal as it is constructive eviction

Front 12

Van Horn leases space from Perfect
Properties, LLC to operate a computer
repair store in a small shopping center.
Van Horn pays $2,400 per month in rent
and must also pay 5% of his gross sales. His
lease is most likely a(n):

a. percentage lease.
b. gross lease.
c. indexed lease.
d. escalation lease

Back 12

A) percentage lease

Front 13

Which of the following would be
reasonable issues to address in any lease
agreement?

a. rent due date, date rent is
considered late, and any penalty.
b. the names of all occupants and the
intended use.
c. who will be responsible for repairs
and repair caps.
d. all of these

Back 13

D) all of these

Front 14

Buyer J makes an offer of $225,000 on
Seller W’s home which is listed for
$227,500. While W is considering the offer,
Buyer J contacts his agent requesting the
offer be withdrawn. Meanwhile, Seller W
has signed the contract and notified his
agent. Which of these statements is TRUE if
it were to occur?

a. Buyer J cannot withdraw the offer
as Seller W has already accepted
and signed.
b. Buyer J cannot withdraw the offer
as the agent for Seller W was
notified of the acceptance.
c. Buyer J can withdraw the offer since
there was no communication of
acceptance to him or his agent.
d. Buyer J can withdraw the offer since
there is no acceptance of the offer

Back 14

C) Buyer J can withdraw the offer since
there was no communication of
acceptance to him or his agent.

Front 15

The most accurate term to describe the
person making an offer is the:

a. buyer.
b. seller.
c. offeree.
d. offeror.

Back 15

D) offeror

Front 16

The seller is to the listing agreement as the
buyer is to the:

a. listing agreement.
b. buyer brokerage agreement.
c. purchase agreement.
d. lease.

Back 16

B) buyer brokerage agreement

Front 17

Once a lease is agreed to, the tenant is said
to have a:

a. freehold estate.
b. leased fee.
c. leasehold interest.
d. reversionary interest.

Back 17

C) leasehold interest

Front 18

Which party is typically the optionee?

a. seller
b. buyer
c. offeree
d. broker

Back 18

B) buyer

Front 19

An essential requirement for any contract
to be valid is the offering of money or
anything of value. This is known as:

a. currency
b. consideration
c. financing
d. colic

Back 19

B) consideration

Front 20

Broker Adams is meeting with the seller of
a duplex. Adams estimates the value of the
duplex to be $195,000. Adams and the
seller enter into a listing agreement with no
specific commission but instead, the seller
tells Adams he can have any funds above
the seller’s required proceeds of $75,000.
What type of listing does Adams have?

a. exclusive agency
b. open listing
c. flat fee listing
d. none of these

Back 20

D) none of these