Question 1

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

Accepted Answer

Requiring a party to perform under a contract is not rescission. Rescission is actually the process of cancelling or nullifying a contract, typically due to a mistake or misrepresentation.

Question 2

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

Accepted Answer

While the trustee has a fiduciary duty to act in the best interests of the beneficiaries, the trustee generally has the authority to enter into contracts on behalf of the trust without approval from the beneficiaries. However, the specific terms of the trust document and applicable law may affect the trustee's ability to enter into certain types of contracts without beneficiary approval.

Question 3

Liquidated damage provisions contained in contracts are always enforceable.

Accepted Answer

Liquidated damage provisions must meet certain legal standards in order to be enforceable. They must be a reasonable estimate of the actual damages that would be incurred in the event of a breach of contract, and they cannot be a penalty designed to punish the breaching party. Therefore, not all liquidated damage provisions are enforceable.

Question 4

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 5

A person being appointed to act under a power of attorney must be a lawyer.

Accepted Answer

A person appointed to act under a power of attorney does not need to be a lawyer. The person could be a family member or friend of the person giving the power of attorney, or a professional such as an accountant or financial advisor. However, in some cases, it may be advisable to have a lawyer act as the agent under the power of attorney for legal matters.

Question 6

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

Accepted Answer

Liquidated damage provisions are not designed to punish a party for not performing but rather to establish in advance the amount of damages that will be paid in the event of a breach of contract. This is done to provide certainty and avoid the need for parties to engage in costly and time-consuming litigation to determine damages.

Question 7

Not every contract must be in writing to be enforceable.

Accepted Answer

While some contracts may be required to be in writing (such as real estate transactions), many contracts can be enforced even if they are not in writing. Factors such as the parties' intent, actions, and communications can be used to establish the existence and terms of an oral contract. However, it is generally advisable to have important contracts in writing to avoid any misunderstandings or disputes.

Question 8

The amount of money damages 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

This statement is not universally true. The amount of money damages for a breach of contract can vary depending on the specific terms of the contract and the circumstances of the breach. It may not always be solely based on the difference between the contract price and market value of the real property.

Question 9

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 the contract itself by the party who breached it, rather than termination or reimbursement.

Question 10

All contracts must be in writing to be enforceable.

Accepted Answer

While it is generally recommended to have contracts in writing to ensure clarity and evidence of agreement, oral contracts can still be legally binding and enforceable in certain circumstances.

Question 11

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

Accepted Answer

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

Question 12

The amount of money damages 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 a breach of contract involving real property, the measure of damages is typically the difference between the contract price and the market value of the property at the time and place of default, to put the non-breaching party in the position they would have been in had the contract been fulfilled.

Question 13

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 affirm the contract or disaffirm it. If the minor disaffirms the contract, it becomes void and unenforceable.

Question 14

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

Accepted Answer

The sale of property by a limited partnership requires the signature of the general partner, who has the authority to act on behalf of the partnership. The limited partners are not directly involved in the management or decision-making of the partnership and do not typically have signing authority for contracts.

Question 15

The liquidated damage provisions in a contract are generally enforceable provided they do not result in a penalty.

Accepted Answer

Liquidated damage provisions are intended to compensate a party for anticipated losses due to a breach of contract. As long as the amount stated is a reasonable estimate of the actual damages and not a penalty designed to punish the breaching party, courts will generally enforce these provisions.

Question 16

A real estate contract must be in writing to be enforceable.

Accepted Answer

According to the Statute of Frauds, a real estate contract must be in writing to be enforceable.

Question 17

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 18

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

Accepted Answer

An executor's power to buy and sell real property on behalf of the estate is limited and usually requires court approval.

Question 19

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

Accepted Answer

Mental incompetence refers to a person's inability to understand and make decisions due to a mental disability or illness, and it is not related to their ability to read or comprehend a contract. Even if a person fails to read or understand a contract, they are still considered mentally competent as long as they are sound of mind and capable of making informed decisions.

Question 20

A contract entered into between an adult and a minor is unenforceable by both parties.

Accepted Answer

A minor can disaffirm a contract, meaning they can choose to not be bound by the terms of the contract. However, an adult is still bound by the terms of the contract and can be held liable for any breach.

Quiz 6: Contracts

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

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

Liquidated damage provisions contained in contracts are always enforceable.

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

A person being appointed to act under a power of attorney must be a lawyer.

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

Not every contract must be in writing to be enforceable.

The amount of money damages 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.

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

All contracts must be in writing to be enforceable.

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

The amount of money damages 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.

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

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

The liquidated damage provisions in a contract are generally enforceable provided they do not result in a penalty.

A real estate contract must be in writing to be enforceable.

Illiteracy of a party renders a contract unenforceable.

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

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

A contract entered into between an adult and a minor is unenforceable by both parties.