CNE Contract Law & Agreement Drafting 3

Question 1

An 'addendum' to a real estate contract is best described as:

Accepted Answer

A supplemental document that adds or modifies terms of the existing contract

Answer

A replacement of the original contract with new terms

Answer

A seller's disclosure form required by state law

Answer

An agent's commission agreement separate from the purchase contract

Question 2

Which doctrine allows a court to refuse enforcement of a contract clause found to be grossly unfair or oppressive?

Accepted Answer

Unconscionability

Answer

Promissory estoppel

Answer

Parol evidence rule

Answer

Impossibility of performance

Question 3

What is 'due diligence' in the context of a negotiated real estate agreement?

Accepted Answer

The buyer's investigation period to inspect, research, and verify facts about the property

Answer

The agent's obligation to market the property aggressively

Answer

The lender's credit check on the buyer

Answer

The title company's search for outstanding liens

Question 4

When a party fails to fulfill a material obligation under a contract, this is known as:

Accepted Answer

Breach of contract

Answer

Waiver

Answer

Recession

Answer

Mutual rescission

Question 5

An 'indemnification clause' in a contract is designed to:

Accepted Answer

Require one party to compensate the other for specified losses, damages, or liabilities

Answer

Set the purchase price for the property

Answer

Establish the agent's fiduciary responsibility

Answer

Limit the number of offers a seller may consider

Question 6

The 'parol evidence rule' in contract law generally provides that:

Accepted Answer

Prior oral or written negotiations cannot be used to contradict or modify the terms of a final written contract

Answer

Verbal agreements made before signing are automatically included in the written contract

Answer

All contract terms must be read aloud at closing

Answer

Amendments must be approved by a notary public

Question 7

In negotiating real estate contracts, a 'merger clause' (also called an integration clause) serves to:

Accepted Answer

Confirm that the written contract represents the entire agreement, superseding all prior negotiations

Answer

Merge two separate properties into one title

Answer

Combine the buyer's and seller's agents into a dual agency arrangement

Answer

Transfer the seller's mortgage obligations to the buyer