Question 1

Generally, powers of attorney are automatically revoked by the death or insanity of the principal.

Accepted Answer

This means that if the person who created the power of attorney passes away or becomes incapacitated, the power of attorney is no longer valid.

Question 2

All contracts must be in writing to be enforceable.

Accepted Answer

While it is generally recommended to have a written contract for clarity and proof of agreement, verbal contracts can also be enforceable under certain circumstances. However, some types of contracts such as contracts for the sale of goods over a certain amount (as defined by the Uniform Commercial Code) must be in writing to be enforceable.

Question 3

A minor's contract is voidable at the election of the minor.

Accepted Answer

A minor's contract is considered voidable, which means that the minor has the option to either enforce or void the contract. The minor can choose to do so either during their minority or within a reasonable time after reaching the age of majority.

Question 4

The seller should be identified in a contract exactly the way the seller holds title to the real property.

Accepted Answer

In a contract, the seller should be identified exactly as they hold title to ensure legal accuracy and avoid potential disputes or issues with the transfer of ownership.

Question 5

Lack of knowledge or inability or failure to read a contract does not make a person a mental incompetent.

Accepted Answer

A person's inability to read or understand a contract does not automatically render them mentally incompetent; mental incompetence is a legal determination based on a person's mental capacity to understand and make decisions.

Question 6

Termination of a contract and reimbursement for expenses is known as specific performance.

Accepted Answer

Termination of a contract and reimbursement for expenses is not known as specific performance. Specific performance refers to the actual performance of a contractual obligation, rather than termination or reimbursement.

Question 7

Not every contract must be in writing to be enforceable.

Accepted Answer

While some contracts, such as those involving real estate or goods over a certain value, must be in writing to be enforceable, many other types of contracts can be oral or implied by the conduct of the parties and still be legally binding.

Question 8

An agreement whereby an owner hires a broker to sell real property is known as a listing agreement.

Accepted Answer

A listing agreement is a contract between a property owner and a real estate broker that grants the broker the exclusive right to advertise and sell the property.

Question 9

Illiteracy of a party renders a contract unenforceable.

Accepted Answer

Illiteracy does not automatically render a contract unenforceable. Contracts can be valid if the illiterate party understands the contract's terms, possibly through verbal explanation or other means.

Question 10

An agreement whereby an owner hires a broker to sell real property is known as a power of attorney.

Accepted Answer

An agreement whereby an owner hires a broker to sell real property is known as a real estate listing agreement or a broker listing agreement. A power of attorney is a legal document that authorizes one person to act on behalf of another person in various legal and financial matters.

Question 11

Liquidated damage provisions contained in contracts are always enforceable.

Accepted Answer

Liquidated damage provisions are only enforceable if they represent a reasonable estimate of the actual damages incurred in the event of a breach of contract. If the provisions are deemed to be a penalty or disproportionate to the harm caused by the breach, they may be unenforceable.

Question 12

It is not necessary for a contract to state consideration flowing from one party to another.

Accepted Answer

Consideration is a fundamental aspect of a contract and must be clearly stated for it to be legally enforceable.

Question 13

Liquidated damage provisions contained in a contract are designed to punish a party for not performing.

Accepted Answer

Liquidated damage provisions are actually designed to provide a pre-determined amount of compensation to the non-breaching party in case the other party fails to perform their obligations as defined in the contract. It is not a punishment mechanism.

Question 14

An executor always has the power to buy and sell real property on behalf of an estate.

Accepted Answer

An executor's power to buy and sell real property on behalf of an estate depends on the terms of the will, the laws of the state where the estate is being probated, and sometimes a court's approval.

Question 15

A contract entered into by a trustee must be approved by the beneficiaries of the trust.

Accepted Answer

While a trustee must act in the best interest of the beneficiaries of the trust, they have the authority to enter into contracts on behalf of the trust as long as it is within their powers and duties outlined in the trust agreement. Approval from beneficiaries is not required unless stated in the trust document.

Question 16

An executor has limited power to buy and sell real property on behalf of the estate.

Accepted Answer

An executor can only sell or transfer real property on behalf of the estate if they have been granted authority to do so through a court order or if the power is specifically granted in the will. They cannot simply buy or sell property at their own discretion.

Question 17

Requiring a party to perform under a contract is known as rescission.

Accepted Answer

Requiring a party to perform under a contract is known as specific performance, not rescission. Rescission refers to the cancellation or termination of a contract.

Question 18

The sale of property by a limited partnership requires that the limited partners sign the contract.

Accepted Answer

The general partner of the limited partnership has the authority to sign contracts on behalf of the partnership, including contracts for the sale of property. Limited partners are not typically involved in the day-to-day operations or decision making of the partnership.

Question 19

The amount of money damage for a breach of contract is the difference between the contract price and the market value of the real property at the time and place of default.

Accepted Answer

In contract law, damages for breach of contract involving real property are typically calculated as the difference between the contract price and the market value at the time and place of default, reflecting the loss incurred by the non-breaching party.

Question 20

The amount of money damage for a breach of contract is the difference between the contract price and the market value of the real property at the time the suit is brought for breach of contract.

Accepted Answer

The amount of money damage for a breach of contract is typically calculated as the difference between the contract price and the market value of the property at the time of the breach, not when the suit is brought.

Quiz 5: Contracts