Arizona Real Estate License Contracts and Contract Law 3

Question 1

The legal principle that prevents parties from introducing prior oral agreements to contradict a written contract is the:

Accepted Answer

Parol Evidence Rule

Answer

The Parol Evidence Rule bars prior oral statements from contradicting the terms of a fully integrated written contract.

Question 2

What happens to earnest money when a buyer defaults on a valid purchase contract without a valid contingency?

Accepted Answer

It is typically forfeited to the seller

Answer

A defaulting buyer who has no valid contingency generally forfeits the earnest money to the seller as agreed damages.

Question 3

The substitution of a new contract or new party for an existing one, releasing the original obligation, is called:

Accepted Answer

Novation

Answer

Novation substitutes a new contract or party and releases the original party from liability.

Question 4

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

Accepted Answer

Executed

Answer

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

Question 5

Under Arizona contract law, time is considered 'of the essence' when:

Accepted Answer

The contract expressly states deadlines are mandatory

Answer

A 'time is of the essence' clause makes stated deadlines strictly enforceable, and failure to meet them is a breach.

Arizona Real Estate License Practice Test