WorksheetsCh. 4 Contracts and Agency
Total questions: 80
Worksheet time: 40mins
Mutual assent to a real estate contract is indicated by
attestation
offer and acceptance
acknowledgment
seals
An example of an executory oral contract that is enforceable is a
lease for six months starting in six months
sale of a lot for less than $500
lease for two weeks starting in 12 months
sale of drapes for $600
A contract of adhesion is a contract that
is impossible to perform
has no offeror
is offered as "take it or leave it"
cannot be breached
After an offer is accepted, the seller finds out that the broker was the undisclosed agent for the buyer, as well as the agent for the seller. What are the seller's rights?
The seller can withdraw without obligation to broker or buyer.
The seller can withdraw but is subject to liquidated damages.
The seller can withdraw only with concurrence of the buyer.
The seller is subject to specific performance if refusing to sell.
A voidable contract could be described as
valid unless voided
void unless validaded
illegal
unenforceable by either party
A remedy that puts the parties back in the positions they were in before entering into a contract is
specific performance
waiver
recission
accord and satisfaction
By agreement, one party to a contract was discharged and another party took her place. This is an act called
a rescission.
a reformation.
a novation.
an accord and satisfaction.
Which of the following is regarded as a customer of a broker?
A property owner under an open sale listing
A property owner under an exclusive sale listing
A buyer under an exclusive buyer listing contract
A buyer who is not represented by an agent
In an assignment of a contract,
the old party is relieved of all contractual obligation.
the assignor remains primarily liable for the contract.
the assignee assumes contractual liability.
a new agreement is substituted for the old agreement.
An anticipatory breach of contract is
a statement by a party that they would not perform.
a request for extension of time.
failure to perform by date set for completion.
a request for contract reformation.
Under the Uniform Vendor and Purchaser Act, the buyer is responsible for property loss
after purchase contract is entered.
only after title passes to the buyer.
when taking possession.
only if the buyer caused the loss.
M and N agree that M would buy N's lot for $68,000, with the settlement scheduled for next Thursday. What type of contract was made?
bilateral, express, and executory
implied, express, and executed
unilateral, express, and executory
bilateral, implied, and executed
M agreed to buy N's lot, which was represented by N as being zoned for a duplex. After closing, M found that the lot had single-family zoning and was not suitable for M's needs. M should seek the remedy of
specific performance.
liquidated damages.
reformation.
rescission.
A seller's agent owes the buyer the duty of
loyalty and obedience.
confidentiality and accounting.
fairness and honesty.
disclosure and due care.
A deed given to a buyer left out a paragraph. Because of this error, the buyer received 20 acres less than bargained for. When the buyer discovers the error, what remedy should be sought?
punitive damages
injunction
waiver
reformation
L promised to give M a condominium for her birthday. L had a change of mind and refused to do so. Based on these facts, in a lawsuit brought by M, the primary concern of the court is
the legality of the promise.
consideration for the promise.
mutuality of the agreement.
competency of the parties.
A real estate broker who has a sale listing is normally a
buyer's agent.
special agent.
general agent,
universal agent.
An agent indicated he was acting as a principal. A third party suffered damages because of the agent's action. The person liable for the loss is
only the agent, because the agency was not revealed.
only the principal, because the principal bears ultimate responsibility.
both the agent and the principal.
either the agent or the principal.
In most sales, the buyer's agent is NOT paid a commission by the buyer because
commissions are never paid by buyers.
the buyer's agent receives a commission split from the seller's agent.
the buyer's listing requires the sellers to pay the buyer's broker fee.
the broker acts as a dual agent.
An oral contract for the sale of real property was consummated. After the sale, the seller wants to rescind. Which of the following is TRUE?
The contract is binding upon buyer and seller.
Only the buyer can rescind.
Only the seller can rescind.
Because the contract was oral, the sale was void.
A requirement of a valid purchase agreement is
liquidated damages.
earnest money.
"time is of the essence" clause.
offer and acceptance.
An agent made a secret profit while acting for the principal. This violated the agent's duty of
care.
loyalty.
obedience.
accounting.
Which of the following would make a contract voidable?
a contract for an illegal purpose
a contract by a person adjudged insane
a contract to make a gift in the future
a contract entered into because of fraud
A purchase contract provision stating that the buyer, if failing to complete the purchase, will forfeit the deposit is called
liquidated damages.
the safety clause.
punitive damages.
the subordination clause.
Failure to include a time period for acceptance in an offer to purchase would
void the offer.
keep the offer open for acceptance during a reasonable period of time.
allow the offer to be accepted anytime before revocation.
require immediate acceptance or the offer will expire.
A court ordered L to pay M $100,000 in excess of M's out-of-pocket damages that resulted from L's breach of a contract with M. What is this $100,000 called?
liquidated damages
compensatory damages
punitive damages
nominal damages
L purchased a commercial lot from M based on M's fraudulent representation as to los size, zoning, and sewer connections. L cannot use the parcel purchased. What remedy should L seek?
reformation
waiver
rescission
specific performance
S's offer to purchase states that it will be kept open three days for acceptance. One day after making the offer, and before acceptance, S wants to withdraw it. The real estate agent should inform S that
the offer may be withdrawn without penalty.
revocation means the forfeiture of earnest money.
only in the event of death can the offer be revoked before acceptance.
the offer is irrevocable.
An owner died one month after signing a six-month exclusive-right-to-sell listing. The day after the owner's death, the listing agent procured a buyer for the full list price. The administrator of the owner's estate does not wish to sell. What are the rights of the parties?
The buyer can obtain specific performanc.
The listing broker has earned commission.
The listing broker can obtain specific performance.
The administrator need not sell and is not liable for commission.
A prospective buyer sued a seller for specific performance. While the purchase agreement was not a valid contract when entered into, the buyer discovered it was unenforceable because of
the seller's death.
the statute of frauds.
the statute of limitations.
an assignment of interests.
An owner listed the same property with three separate agents. The owner gave an exclusive-right-to-sell listing to broker L, an exclusive agency listing to broker M and an open listing to broker N. Broker N sold the house and collected a commission while the other listings were still in effect. What are the rights of L and M as to a commission?
L and M are both entitled to a split of the commission from N.
L and M are entitled to a second commission to be split between them.
L and M are each entitled to a full commission.
L and M are not entitled to any commission.
On June 1, J mailed K an offer to buy K's property. J gave K 15 days for acceptance. On June 3, J mailed a letter to K revoking the offer. On June 4, before receiving the revocation, K mailed a written acceptance of J's offer. Based on these facts,
a valid contract was formed because the offer was irrevocable for 15 days.
J is bound to the purchase agreement because the offer was accepted before revocation.
the offer cannot be accepted because the acceptance was mailed after the revocation was mailed.
if the revocation is received before receipt of the acceptance, no contract will be formed.
One salesperson in a brokerage office is serving as an owner's agent, while another salesperson in the same office is serving as the buyer's agent for the same transaction. This is an example of
limited liability transaction.
facilitator transaction.
designated agency.
controlled business arrangement.
An agency that may NOT be terminated by an owner is
an exclusive listing.
an agency coupled with an interest.
a power of attorney.
an express agency.
J agreed to sell a lot to K. J mistakenly believed the lot was zoned for multifaimly apartments and told K that the lot was zoned for a 16-unit apartment building. However, K new the correct zoning and nevertheless entered into the purchase agreement. Before closing, what are the rights of the parties?
Either J or K can void the contract.
Only K can void the contract.
The contract is void because of the misrepresentation.
The agreement as made is enforceable by either J or K.
A contract is void if it involves
misrepresentation of the purchaser's intentions.
an illegal purpose.
duress.
undue influence.
In interpreting a contract, a court would consider that
a contract should be interpreted in favor of the party drafting the instrument.
a later document takes precedence over an earlier document.
numerals take precedence over written words.
a printed clause would take precedence over a handwritten portion of an agreement.
J agreed to sell K a lot for $6,000. J later refused to sell, and K purchased a similar lot for $8,000. A court awarded K $2,000 in damages. Which term describes the damages?
nominal
punitive
compensatory
liquidated
The amount of commission is determined by
local custom.
the multiple listing service.
the department of real estate.
negotiation.
A broker obtained an offer on an apartment building from a syndicate. The broker was a member of this syndicate but had not informed the seller of this interest. Before the closing of the accepted offer, the owner discovered the broker's interest and refused to sell. If the broker sued the owner for the commission, the court would
order revocation of the broker's license.
order payment of the commission to the broker.
release the owner from the obligation to pay the commission.
order that the buyer obtain specific performance.
L and M agree that L will buy M's farm for $400,000 cash, with the sale to take place in three months. This is an example of what type of contract?
bilateral, express, executed
bilateral, express, executory
unilateral, express, executory
unilateral, implied, execute
A clause requiring punctual performance of a contract is called the
"time is of the essence" clause.
contingency date clause.
reasonable time for performance clause.
excusable delay clause.
J, who operated his brokerage office as a sole proprietorship, died. His daughter K, also a broker, wishes to take over all her father's listings. She should
inform all the owners that she is the successor in interest to her father.
obtain the approval of the probate court.
inform the state that she has taken over responsibility for the listings.
renegotiate all the listings.
A right to buy a property at a yet undetermined price, where the seller is free not to sell, is a
lease option.
right of first refusal.
purchase contract.
sale-leaseback.
A builder failed to follow the agreed landscaping plans. The purchaser decided to accept the variance and pay the full contract price. This is called
accord and satisfaction.
waiver.
novation.
reformation.
A contractual disagreement led to a builder's reduction of the contract price by $1,000. This agreement is
unenforceable because of a lack of consideration.
an accord and satisfaction.
a novation.
a waiver.
An owner refuses an offer, even though it is exactly in accordance with a valid exclusive-right-to-sell listing. What are the owner's rights?
The owner does not have to sell.
The owner is liable to the buyer for money damages.
The owner likely will be sued by the broker for specific performance.
The owner is liable to the buyer for specific performance.
Broker M told buyer N that a home was in a "great neighborhood." After purchasing the home, N found out that there had been several recent crimes in the area. The statement of broker M is regarded as
misrepresentation.
a mutual mistake.
fraud.
puffing.
An oral contract for the sale of real estate is
illegal.
unenforceable.
valid for property of low value.
enforceable if witnessed.
Broker L works with both buyers and sellers to complete sales transactions but does not have any agency obligations. Broker L
is a dual agent.
is acting as a facilitator.
still has a fiduciary duty to both parties.
has no disclosure duties to either party.
In order to obtain a sale listing, the agent loaned the owner money to avoid foreclosure. The agency is
illegal.
coupled with an interest.
implied.
by estoppel.
A broker has a single agency with a seller. Nevertheless, the broker has a duty to
disclose to a buyer detrimental facts about the property.
obtain the best possible deal for a buyer.
tell a buyer why the seller is selling.
tell a buyer about any previous offers received that failed to close.
A broker never saw, talked to, or corresponded with a buyer, yet the broker earned a commission when the buyer made an accepted offer to the owner. What kind of listing was it?
open
exclusive right to sell
exclusive agency
buyer
In a buyer's brokerage situation, who pays the salesperson's commission?
buyer only
seller only
buyer and seller
salesperson's broker
The principle that verbal evidence cannot be used to modify a written document that is complete on its face is
the statute of frauds.
the statute of limitations.
the parol evidence rule.
laches.
Which listing would raise an ethical question because of the owner's and the broker's differing interests?
buyer listing
net listing
open listing
MLS listing
At an auction, the
person bidding is the offeror.
auctioneer is the offeror.
owner is the offeror.
buyer is the offeree.
Which of the following would constitute an acceptance to a purchase offer?
an acceptance where the closing date was changed
an acceptance that required an increase in earnest money
a verbal acceptance with a promise of a written confirmation
an acceptance that requests a change in closing date
When presenting multiple offers to purchase, the agent should
present the offers in the order received.
present the agent's offer first before offers from other firms.
inform the owner that one of the offers must be accepted.
present all offers together.
A buyer asks for specific performance. The buyer wants the seller to
pay compensatory damages.
pay punitive damages.
convey in the manner agreed.
insure the title.
An owner refuses a full price offer on a property for which the broker has an exclusive-right-to-sell listing. The broker is entitled to
monetary damages.
specific performance.
waiver.
novation.
A listing stated that commission would be "five percent (5%) of the sales price." The purchase contract signed by the buyer and the listing agent and accepted by the owner said that the broker's commission would be 4.5%. What is the broker entitled to?
6%, because it is states as a number in the listing
5%, because it is stated in words in the listing
4.5%, because it is in the purchase agreement
Nothing, because there is no meeting of the minds
A tenant took possession under an oral 10-year lease. One month later, the lessor gave the tenant a notice to vacate. As to the tenant's rights,
the tenant has no enforceable lease.
the tenant is entitled to one year tennancy at agreed rent.
the tenant must vacate but is entitled to damages.
the tenancy is for 10 years as possession passes.
A requirement of any valid purchase contract is
earnest money.
liquidated damage provision.
description of the property.
date of closing.
The owner wishes to cancel an exclusive-right-to-sell listing before expiration. Which of the following statements is TRUE?
The broker can disregard the owner's request, and if a full price offer is received, the owner must accept.
The owner is liable for punitive damages.
The owner can cancel the listing if reasonable notice is given.
The owner can cancel the listing immediately.
A transaction broker has duties to both buyer and seller. These duties constitute
dual agency.
separate but equal agencies.
fair and honest dealing.
the same as an agent's duties.
An agent rented property to a tenant without checking the tenant's credit. A credit report would have shown a history of repeated evictions for nonpayment of rent. The agent breached a duty of
loyalty.
obedience.
financial trust.
due care.
Damages were greatly in excess of losses suffered were awarded by a court. These were MOST likely
liquidated damages.
liquidated damages.
punitive damages.
compensatory damages.
Which of the following is considered an invitation to negotiate?
a bilateral contract
an exclusive-right-to-sell listing
a newspaper advertisement
a net listing
A prospective buyer gave an owner $500 to keep an offer to sell open for 30 days. The agreement was reduced to writing and signed by the parties. Ten days later, the owner indicated that she would not sell. Which of the following is TRUE?
While the owner need not to sell, the $500 must be returned.
The owner must sell as well as return the $500.
The buyer is not obligated to buy.
The agreement can be enforced by the owner.
The difference between rescission and waiver is that
rescission may be assigned.
waiver is retroactive.
waiver leaves parties as they are.
waiver allows specific performance.
A broker was sued for reporting false information supplied by an owner. The owner has a liability to the broker for broker loss based on the
habendum clause.
safety clause.
hold-harmless clause.
arbitration clause.
An exclusive agency listing states "6¢" rather than "6%" commission. The owner sells the property. The broker is entitled to
a 3% commission
a 6% commission
a 6¢ commission
nothing
A nurse persuaded her long-term patient to sell the house to the nurse at a small fraction of its value. Based on these facts, to set aside the transaction, the patient's children would allege
fraud.
undue influence.
an illegal contract.
menance.
Which of the following is FALSE regarding an assignment of a contract?
The assignee is primarily liable on the contract.
All of the assignor's interests are transferred to the assignee.
All contracts are assignable.
The assignee assumes the duties of the assignor.
An exception to the statute of frauds requiring real estate sales agreements to be in writing is
where the value is insignificant.
when a broker is not involved.
when the buyer takes possession and makes improvements.
a verbal sales agreement where the seller is a government agency.
After an offer is accepted, but before closing, a broker notices evidence of termite infestation. The broker should
remain silent as the contract has been entered into.
inform the buyer only.
inform the seller only.
inform the buyer and seller.
A right that does not exist until an owner makes a decision is
an option.
a right of first refusal.
a license.
an easement in gross.
An optionor is
a tenant.
the person receiving the option.
the person exercising the option.
the person giving the option.
A seller did not evict a tenant before closing as agreed. Knowing of the failure, the buyer elects to complete the transaction. This is regarded as
accord and satisfaction.
waiver.
reformation.
substantial performance.
