Arizona Real Estate License Contract Law and Practice 3

Question 1

A contract that has been fully performed by both parties is described as:

Accepted Answer

Executed

Answer

An executed contract is one in which all parties have completely fulfilled their obligations.

Question 2

Which of the following would render a real estate contract void rather than merely voidable?

Accepted Answer

An illegal purpose such as selling to evade zoning fraud

Answer

A contract with an illegal objective is void from the outset and unenforceable.

Question 3

In Arizona, if a buyer breaches the purchase contract and the agreement contains a liquidated damages clause, the seller is typically entitled to:

Accepted Answer

Retain the earnest money as agreed damages

Answer

A liquidated damages clause commonly allows the seller to keep the earnest money as the agreed remedy for buyer default.

Question 4

The legal remedy compelling a party to complete a real estate sale as agreed is called:

Accepted Answer

Specific performance

Answer

Specific performance forces completion of the contract because real property is considered unique.

Question 5

Substituting a new party into a contract, releasing the original party from obligation with all parties' consent, is known as:

Accepted Answer

Novation

Answer

Novation replaces a party or obligation and releases the original party by mutual agreement.

Arizona Real Estate License Practice Test