OREA Contract Law for Real Estate

Question 1

What are the essential elements required to form a valid contract for the sale of real estate in Ontario?

Accepted Answer

Offer, acceptance, consideration, intention to create legal relations, capacity of parties, and legality of purpose

Answer

Only a written offer and acceptance

Answer

Only the signatures of the buyer and seller

Answer

A verbal agreement and a handshake

Question 2

Under the Ontario Statute of Frauds, what is required for a contract for the sale of land to be enforceable?

Accepted Answer

The contract must be in writing, signed by the party to be charged

Answer

A verbal agreement is sufficient

Answer

Only a witness is needed for verbal agreements

Answer

Electronic agreements are never enforceable

Question 3

In Ontario, what is 'consideration' in a real estate contract?

Accepted Answer

Something of value exchanged between the parties, typically the purchase price in exchange for the property

Answer

The seller's careful thought about whether to sell

Answer

The time spent negotiating the deal

Answer

The real estate agent's commission

Question 4

What happens when a buyer or seller lacks 'capacity' to enter into a real estate contract in Ontario?

Accepted Answer

The contract may be voidable, meaning the party lacking capacity can choose to affirm or avoid the contract

Answer

The contract is valid but at a higher price

Answer

The contract is automatically valid

Answer

The real estate agent assumes responsibility

Question 5

In Ontario real estate, what is the legal effect of a 'counter-offer'?

Accepted Answer

It terminates the original offer and creates a new offer that the other party can accept or reject

Answer

It keeps the original offer alive while adding new terms

Answer

It automatically extends the irrevocability period

Answer

It has no legal effect until signed by both parties

Question 6

What is an 'irrevocable' period in an Ontario Agreement of Purchase and Sale?

Accepted Answer

The period during which the offer cannot be revoked by the offeror, giving the recipient time to consider it

Answer

The period during which the buyer can withdraw without penalty

Answer

The period after closing during which the deal can be undone

Answer

A mandatory 10-day cooling-off period