rep ch. 6

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rep ch. 6
2011-10-04 14:11:35

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  1. 1. What are the terms “adequate, good and sufficient, and valuable” related to?
    A. Consideration
    B. Just compensation
    C. Legal description
    D. Fiduciary duties
    • Question #1
    • Answer: A
    • Explanation: Consideration may be referred to more formally as “adequate, good and sufficient, and valuable consideration.”
  2. 2. A contract for the purchase of a commercial property has mutual consent, consideration, and a legal objective. The contract, however, is conditioned on the buyer finding a tenant for the building within two months. This contract is:
    A. illusory
    B. enforceable
    C. unenforceable
    D. voidable
    • Question #2
    • Answer: B
    • Explanation: A valid contract may be enforceable even if it contains conditions.
  3. 3. A minor who owned property approached a broker to assist in the sale of the property. The broker may not accept a listing from the minor because:
    A. a minor is incapable of appointing an agent
    B. the minor may be able to disaffirm a real estate contract later
    C. a broker is incapable of a fiduciary relationship with a minor
    D. it is illegal for a minor to enter into any sort of contract
    • Question #3
    • Answer: A
    • Explanation: A minor may not appoint an agent because a minor does not have the capacity to contract.
  4. 4. A man acquired a parcel of real property before his arrest and conviction. While in prison, he wished to convey the property to his son. May he do so?
    A. An incarcerated prisoner no longer has the capacity to contract
    B. He may convey the property only with the permission of the state Department of Corrections
    C. Any property owned by a convicted felon is automatically seized by the state for compensation of crime victims
    D. He may convey the property without permission
    • Answer: D
    • Explanation: Generally, a convict may acquire and convey property freely. The only exception would be if the transfer of property poses a threat to public safety.
  5. 5. Which of the following elements is not necessary to the existence of every contract?
    A. Mutual consent
    B. In writing
    C. Parties capable of contracting
    D. Lawful objective
    • Question #5
    • Answer: B
    • Explanation: Not all contracts are required to be in writing, although contracts concerning real estate must comply with the statute of frauds. The four necessary elements for a valid contract are mutual consent, capacity, consideration, and a legal objective.
  6. 6. Which of the following types of contracts cannot be assigned (unless there is an agreement to the contrary)?
    A. Lease
    B. Fire insurance policy
    C. Mortgage
    D. Option
    • Answer: B
    • Explanation: Hazard insurance is based on specific qualities of the insured person and the insured property, so it is not assignable. Typically, a policy is terminated upon sale of a property, and a new policy is issued.
  7. 7. A 13-year-old minor owned a lot and asked his father to sell the property. The father gave a listing to a broker, who then sold the property. This transaction was:
    A. valid because the father arranged the transaction
    B. voidable by the minor
    C. void because a minor cannot sign a real estate contract
    D. void because of the father's involvement
    • Question #7
    • Answer: C
    • Explanation: While other types of contracts are voidable by minors, a real estate contract signed by a minor is void at its inception.
  8. 8. A contract that is executory is a:
    A. binding written contract
    B. contract that contains a promise for a promise
    C. contract that has not yet been fully performed
    D. contract that has been fully performed
    • Question #8
    • Answer: C
    • Explanation: An executory contract is in the process of being performed. An executed contract, by comparison, is one that has been completely performed.
  9. 9. If an agreement to transfer real estate is only made orally, it is:
    A. always enforceable
    B. enforceable in unusual circumstances
    C. always unenforceable
    D. voidable
    • Question #9
    • Answer: B
    • Explanation: An oral contract for the sale of real property may be enforceable in certain circumstances, such as if the purchase price has already been paid or the contract has been partially performed.
  10. 10. If a contract has been rescinded, that means that it has been:
    A. rewritten
    B. annulled
    C. rejected
    D. performed
    • Question #10
    • Answer: B
    • Explanation: Rescission annuls a contract. In other words, it invalidates the contract and puts the parties back as closely as possible to where they were before the contract was made.
  11. 11. In which of the following circumstances would a deed always be void?
    A. A forged deed in the hands of a bona fide purchaser
    B. A deed signed by an incarcerated convict
    C. A deed signed by an unmarried person under age 18
    D. A deed that is not supported by consideration
    • Question #11
    • Answer: A
    • Explanation: A forged deed is always void, even if in the hands of a good faith purchaser. A convict may convey property unless it would pose a threat to public safety. An unmarried person under 18 would ordinarily not be able to sign a real estate contract, but a person under 18 who has married and then divorced would be legally emancipated and thus have contractual capacity. A deed does not require any consideration to be valid.
  12. 12. Which of the following contracts would not be required under the statute of frauds to be in writing?
    A. An agreement to rent a property for a ten-year term
    B. An agreement to purchase timber that will be cut in two years
    C. An agreement between a principal and an agent to buy real property
    D. A partnership agreement to sell real property
    • Question #12
    • Answer: D
    • Explanation: An agreement between partners to buy or sell real property would not need to be in writing. An agency agreement to buy or sell real property, however, would need to be in writing. Any agreement that will not be performed within one year also needs to be in writing.
  13. 13. Scott agreed unconditionally to perform his part of a purchase contract. This is known as a/an:
    A. covenant
    B. condition
    C. tender
    D. anticipatory repudiation
    • Answer: C
    • Explanation: An unconditional offer to perform is a tender. A person who is party to a contract must make a tender before taking legal action against the other party for breach of contract, unless the other party made an anticipatory repudiation.
  14. 14. In a contract, the meeting of the minds between buyer and seller is evidenced by what?
    A. Consideration
    B. Acknowledgment
    C. Performance
    D. Offer and acceptance
    • Question #14
    • Answer: D
    • Explanation: Offer and acceptance demonstrates a meeting of the minds between buyer and seller, indicating that a contract has been formed.
  15. 15. Which of the following would terminate an offer to purchase a house?
    A. Rejection by the offeror
    B. Rejection by the offeree
    C. Revocation by the offeree
    D. Inquiry by the offeree as to whether the offeror will accept different terms
    • Question #15
    • Answer: B
    • Explanation: Rejection by the offeree terminates an offer. An offeror cannot reject an offer (he would revoke it), while an offeree cannot revoke an offer (he would reject it). And an inquiry as to the offeror's flexibility does not serve as a counteroffer.