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1. When an existing contract is replaced with an entirely new contract, it is called:
A. rescission.
B. assignment.
C. novation.
D. subordination.
2. An agreement that is made either verbally or in writing is known as a(n):
A. express contract.
B. mutual consent.
C. implied contract.
D. all of the above.
3. Which of the following is a classification of a contract?
A. Valid
B. Unenforceable
C. Voidable
D. All of the above
4. Which of the following is FALSE concerning purchase agreement contracts?
A. They must be accompanied by a deposit of money or other items of value.
B. When acceptance is communicated to the buyer, it becomes a binding contract.
C. An agent must give a copy to both buyer and seller.
D. Promissory notes and post-dated checks are never acceptable as consideration.
5. Which of the following is NOT considered a basic element of any contract?
A. Enforcement
B. Mutual consent
C. Capacity
D. Consideration
6. A signed written contract takes precedence over oral agreements or prior written agreements based on:
A. the performance rule.
B. English common law.
C. the statute of frauds.
D. the parole evidence rule.
7. Consideration can best be described as:
A. money paid in a contract. C. anything of value.
D. not necessary in a valid contract. B. good will.
8. What is always true about a counter offer?
C. It terminates the previous offer.
D. The previous offer is still valid.
A. It is made by the buyer.
B. It is made by the seller.
9. A remedy for breach can be:
A. a unilateral rescission.
B. an action for damages.
C. an acceptance of breach.
D. all of the above.
10. Which of the following is FALSE concerning options?
A. They can be revoked at any time by the optioner (seller), without penalty.
B. They have specific terms.
C. They have specific time periods.
D. They are granted in exchange for money.
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11. A copy of the purchase agreement should be given to:
A. all parties involved.
B. the Real Estate Commissioner.
C. the seller’s broker only.
D. the buyer’s attorney first.
12. If one of the parties doesn’t go through with a contract (nonperformance), it is called a(n):
A. assignment.
B. breach.
C. consideration.
D. operation of law.
13. A written contract between two parties is:
A. express and unilateral.
B. implied and bilateral.
C. express and bilateral.
D. implied and unilateral.
14. Any contract that can’t be performed within one year from the date of signing:
A. is illegal.
B. must be in writing.
C. is a failure to perform.
D. is an example of duress.
15. An assignment:
A. is only for personal service.
B. transfers only liability.
C. is a new contract.
D. transfers a person’s right in a contract.
16. Of the following, which most nearly means the same thing as “rescind?”
A. Arrest
B. Reword
C. Terminate
D. Fulfill
17. Which of the following is used to change the original terms of the purchase agreement?
A. Covenant form
B. Contingency form
C. Counter offer form
D. Substitution form
18. A provision in a contract stating the purchase depends on the buyer qualifying for a loan is called a:
A. loan back-out clause. C. “subject to” provision or contingency clause.
D. all of the above. B. covenant.
19. If a contract is said to be “executory,” it:
A. is court ordered.
B. has not yet been performed.
C. has been discharged or performed.
D. has not yet been signed.
20. Which of the following is NOT a remedy for breach of contract?
A. Unilateral rescission
B. Specific performance
C. Action for dollar damages
D. Substitute performance
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1. C (p.140)
2. A (p.129)
3. D (p.131-132)
4. D (p.146)
5. A (p.133)
6. D (p.138)
7. C (p.138)
8. C (p.156)
9. D (p.145)
10. A (p.165)
11. A (p.146)
12. B (p.142)
13. C (p.131)
14. B (p.138)
15. D (p.140)
16. C (p.145)
17. C (p.156)
18. C (p.155)
19. B (p.132)
20. D (p.145)
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