15 free questions from the Cinna RE contracts bank (104 in the app). Tap an answer to check it. The rationale opens right away.
A valid contract that can no longer be enforced in court because too much time has passed is:
Answer: A. Unenforceable (statute of limitations)
An unenforceable contract was valid but cannot be enforced due to a legal bar such as the statute of limitations or lack of a writing.
A buyer walks the property and sees a tenant occupying the house, even though no lease appears in the public records. The buyer is charged with:
Answer: B. Actual notice that the tenant exists, requiring further inquiry
Visible possession by a party puts a prospective buyer on inquiry/actual notice; the law expects the buyer to investigate the rights of anyone visibly in possession even if nothing is recorded.
When both parties share a mistaken belief about a material fact, the contract is typically:
Answer: A. Voidable / rescindable
A mutual mistake about a material fact can be grounds to rescind the contract.
A buyer signs a purchase agreement with a 10-day inspection contingency. During the period the inspection reveals serious defects and the buyer properly cancels. The buyer is generally entitled to:
Answer: B. Return of the earnest money deposit
Timely, proper cancellation under a valid inspection contingency is not a breach, so the buyer is normally entitled to a refund of the earnest money.
A buyer submits a written offer to purchase. Before the seller responds, the buyer phones and withdraws the offer. The offer is now:
Answer: B. Revoked, because an offer can be withdrawn any time before acceptance is communicated
An offeror may revoke an offer at any time before the offeree communicates acceptance. Once revoked, there is no longer an offer to accept.
A contract signed by a person who has been legally declared mentally incompetent is generally:
Answer: B. Void
A contract entered into by a person who has been adjudicated mentally incompetent is void because that party lacks the legal capacity to contract.
A seller verbally agrees to sell a parcel of land to a buyer, and they shake hands but never put anything in writing. With respect to enforcement, this agreement is:
Answer: B. Generally unenforceable under the statute of frauds
Because the statute of frauds requires real estate sales contracts to be in writing, a purely oral agreement to sell land is generally unenforceable in court.
A net listing, which is prohibited or discouraged in many jurisdictions, is one in which the broker's commission is:
Answer: C. Any amount the property sells for above a net price set by the seller
In a net listing the seller sets a net amount he must receive, and the broker keeps everything above that figure as commission, creating a conflict of interest that leads many jurisdictions to restrict it.
A clause letting the seller keep the buyer's deposit as the agreed sole remedy if the buyer defaults is called:
Answer: A. Liquidated damages
Liquidated damages is an agreed-in-advance amount (often the earnest money) the non-defaulting party keeps, avoiding a fight over actual damages.
A buyer assigns her rights under a purchase contract to a friend, but the contract contains no anti-assignment clause and is not personal in nature. The assignment is:
Answer: B. Generally valid, though the original buyer typically remains liable unless released
Most real estate purchase contracts are assignable unless prohibited; the assignment is valid, but the assignor usually stays liable absent a release or novation.
When the parties to a real estate contract have both fully performed all of their obligations, the contract is said to be:
Answer: B. Executed
A contract is executed when both parties have completely performed their obligations; while performance remains outstanding, it is executory.
A valid contract that cannot be enforced in court, for example because the statute of limitations has expired, is described as:
Answer: C. Unenforceable
An unenforceable contract may have been valid when made but cannot be enforced in court, such as when the statute of limitations has run.
An option contract is best described as which type of agreement at the moment it is signed?
Answer: B. A unilateral contract in which only the optionor is bound to keep the offer open
An option is unilateral: the optionor is bound to hold the offer open, but the optionee makes no promise to buy and may simply decline.
A contract signed by a person who was so intoxicated that they could not understand the nature of the agreement is generally:
Answer: B. Voidable by the intoxicated party
A contract entered into by someone too intoxicated to understand it is generally voidable at the option of the impaired party, who lacked full capacity at signing.
A purported contract in which one party promised to perform but the other party gave nothing in return is unenforceable because it lacks:
Answer: B. Consideration
A binding contract requires consideration from each party. A promise with nothing given in exchange is generally a gratuitous promise and lacks consideration.
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