Real Estate License Contracts 4

Question 1

Assignment of a contract refers to:

Accepted Answer

Transferring one's rights under the contract to another

Answer

Assignment transfers the contractual rights (and often duties) of one party to a third party.

Question 2

A 'meeting of the minds' refers to:

Accepted Answer

Mutual agreement on the essential terms

Answer

A meeting of the minds means both parties mutually understand and agree to the contract's essential terms.

Question 3

Novation in contract law means:

Accepted Answer

Substituting a new contract or party for an old one

Answer

Novation replaces an original contract or party with a new one, releasing the original obligor.

Question 4

If a buyer fails to perform and the seller keeps the earnest money as agreed, this is an example of:

Accepted Answer

Liquidated damages

Answer

Keeping a pre-agreed deposit upon breach is the use of liquidated damages.

Question 5

Rescission of a contract results in:

Accepted Answer

The contract being canceled and parties restored to original positions

Answer

Rescission cancels the contract and returns both parties to their pre-contract positions.

Real Estate License Practice Test