Question 1

Which of the following is an instance of a mortgage?
A)Richard pays Ellen $1000 a month to live in her apartment.
B)Richard pays Ellen $12, 000 a year to live in her apartment.
C)Richard gives his country estate as collateral to a bank from where he has borrowed money to buy an apartment.
D)Richard lives in an apartment for thirty years and upon his death, the apartment is transferred to somebody else.

Accepted Answer

A mortgage is a loan taken out to purchase a property, where the property itself is used as collateral for the loan. Option C specifies that Richard has given his country estate as collateral to a bank from where he has borrowed money to buy an apartment, which is an instance of a mortgage. Options A, B, and D all involve paying for the use of an apartment, but do not involve a mortgage.

Question 2

A ________ is a person who agrees to pay a debt if the primary debtor does not.
A)secondary contractor
B)third-party contractor
C)lessee
D)guarantor

Accepted Answer

A guarantor is a person who promises to pay a debt if the primary debtor fails to do so. This is often seen in situations such as loan agreements where a third party agrees to pay off the debt if the borrower is unable to make payments.

Question 3

Section 2-201(1)of the Uniform Commercial Code is the basic Statute of Frauds provision for ________.
A)sales contracts
B)lease contracts
C)all contracts involving interests in real property
D)mortgage contracts

Accepted Answer

Section 2-201(1) of the Uniform Commercial Code applies to sales contracts and requires that contracts for the sale of goods priced at $500 or more must be in writing and signed by the parties to be enforceable. This provision does not apply to lease contracts, contracts involving interests in real property, or mortgage contracts.

Question 4

The ________ states that an executory contract which cannot be performed by its own terms within one year of its formation must be in writing.
A)parol evidence rule
B)common law of contracts
C)merger clause
D)one-year rule

Accepted Answer

The rule referred to in the question is the one-year rule, which is a requirement under the statute of frauds that certain contracts must be in writing. Specifically, an executory contract that cannot be performed within one year of its formation must be in writing to be enforceable. The parol evidence rule, common law of contracts, and merger clause are all related to contract interpretation and enforcement, but are not directly relevant to the one-year rule.

Question 5

Ida moves to New York from Poland and wants to live in an apartment.However, she does not have sufficient money to buy one.Her colleague Henry allows Ida to live in his old apartment for a year, if she pays him $25, 000.This contract would be considered a(n)________.
A)lease
B)mortgage
C)installment
D)easement

Accepted Answer

A lease is an agreement between the owner of a property (lessor) and the person who wants to use it (lessee), where the lessor provides the lessee the right to occupy and use the property for a specified period of time and in exchange for a set of payments. In this case, Henry is the lessor and Ida is the lessee, and they have agreed to a rental contract for a year for $25,000. Therefore, this contract is a lease, not a mortgage (which is a loan to purchase a property), an installment (which is a periodic payment for a debt), or an easement (which is a right of use over someone else's property).

Question 6

Which of the following is considered "real property?"
A)a fixture permanently affixed to a building
B)fifty-one percent partnership in a firm
C)a club membership
D)diamond jewelry

Accepted Answer

Real property refers to land and anything permanently attached to it, such as buildings and fixtures. A fixture, which is an object that was once personal property but has become permanently attached to a building or land, falls under the category of real property.

Option B refers to a partnership in a firm, which is a form of personal property, not real property.

Option C refers to a club membership, which is also personal property, not real property.

Option D refers to diamond jewelry, which is also personal property, not real property.

Question 7

A(n)________ occurs when one person agrees to answer for the debts or duties of another person.
A)main purpose exception
B)mortgage
C)guaranty contract
D)implied integration

Accepted Answer

A guaranty contract occurs when one person (the guarantor) agrees to answer for the debts or duties of another person (the debtor) if they fail to pay or perform. This provides the creditor with an additional level of security that they will receive payment or performance, and allows the debtor to obtain credit or enter into contracts that they might not otherwise be able to.

Question 8

Which of the following statements is true of a guaranty contract?
A)The guaranty contract is between the guarantor and the debtor.
B)A guaranty contract need not be in writing.
C)The guarantor's liability is secondary.
D)The original contract is between the creditor and the guarantor.

Accepted Answer

In a guaranty contract, the guarantor's liability is secondary to the debtor's primary liability. The contract is between the creditor and the debtor, with the guarantor providing a guarantee that the debtor will fulfill their obligations. A guaranty contract may be in writing or oral, depending on the jurisdiction and the specific terms of the agreement.

Question 9

Which of the following phrases explains the term lease?
A)an interest in real property given to a lender as security for the repayment of a loan
B)an interest in real property for a person's lifetime
C)the transfer of the right to use real property for a specified period of time
D)a right to use someone else's land without owning or hiring it

Accepted Answer

The term lease refers to the transfer of the right to use real property for a specified period of time. This means that someone else has the right to use or occupy the property, but does not own it. A lease typically involves a landlord and a tenant, and includes specific terms such as the duration of the lease, rent payments, and the responsibilities of each party.

Question 10

Which of the following grants a person the right to use real property for a specified period of time?
A)lease
B)mortgage
C)sale
D)barter

Accepted Answer

A lease grants a person the right to use real property for a specified period of time, typically in exchange for rent payments. A mortgage is a loan used to finance the purchase of real property, while a sale involves the transfer of ownership of real property from one party to another. Barter involves the exchange of goods or services without the use of currency or money, and does not specifically pertain to the use of real property.

Question 11

Which of the following interests in real property transfers to another person after the present holder's death?
A)easement
B)mortgage
C)EMI
D)life estate

Accepted Answer

Only a life estate is a transferable interest in real property that transfers to another person after the present holder's death. Easements, mortgages, and EMIs are not transferable upon the death of the holder.

Question 12

A right to use someone else's land without owning or leasing it is called ________.
A)mortgage
B)easement
C)life estate
D)leasehold

Accepted Answer

An easement is a right to use someone else's land for a specific purpose without owning or leasing it. It typically involves a specific area of the property rather than the entire property, and the owner of the property still retains ownership and control over the land. A mortgage is a loan used to finance the purchase of property, a life estate grants someone the right to use a property for a specific period of time, and a leasehold is a type of ownership where a tenant leases a property from a landlord for a period of time.

Question 13

The ________ states that if the main purpose of a transaction and an oral collateral contract is to provide pecuniary benefit to the guarantor, the collateral contract does not have to be in writing to be enforced.
A)merger clause
B)leading object exception
C)collateral contract rule
D)parol evidence rule

Accepted Answer

The leading object exception states that if the main purpose of a transaction and an oral collateral contract is to provide pecuniary benefit to the guarantor, the collateral contract does not have to be in writing to be enforced. The other options are not relevant to this rule.

Question 14

Jonas enters into an oral contract with Chelsea to lease his house to her for $100, 000.Chelsea pays him $100, 000 and moves in.A month later, Jonas learns that his state requires contracts for the lease of goods with payments of $1, 000 or more to be writing.Which of the following options does either party have?
A)Jonas can evict Chelsea as the contract does not comply with the Statute of Frauds and is hence void.
B)The contract cannot be rescinded by either party as it has already been executed.
C)Chelsea can rescind the contract on the grounds of noncompliance with the Statute of Frauds.
D)Jonas can rescind the contract on the grounds of noncompliance with the Statute of Frauds.

Accepted Answer

The contract has already been executed as Chelsea has paid the amount and moved in, making it enforceable despite the lack of a written agreement.

Question 15

Which of the following does the one-year rule state?
A)Every contract in writing is subject to yearly renewal.
B)The terms of a written contract can be modified within a year of its formation.
C)A contract that cannot be performed on its own terms within a year should be in writing.
D)Valid contracts cannot be rescinded by either party until a year after their formation.

Accepted Answer

The one-year rule is a principle under the Statute of Frauds which states that contracts that cannot be performed within one year of their making must be in writing to be enforceable. This rule is designed to prevent misunderstandings and fraud over the terms of the agreement that cannot be completed within a year.

Question 16

In a guaranty situation, the original contract is between the ________.
A)creditor and the guarantor
B)debtor and the creditor
C)debtor and the guarantor
D)creditor and the lessee

Accepted Answer

In a guaranty situation, the original contract is between the debtor and the creditor. The guarantor agrees to pay if the debtor fails to fulfill their obligation under the contract. The creditor can then pursue the guarantor for payment.

Question 17

Good Faith Consultants partnered with QuickFind IT Solutions for a period of six months.After three months, they wanted to extend the contract by two years.According to the Statute of Frauds, which of the following holds true for the contract?
A)The modification to the duration of the contract should be in writing.
B)A new contract must be formed.
C)The contract can be oral both before and after modification.
D)Only the original contract should be in writing.

Accepted Answer

According to the Statute of Frauds, contracts must be in writing if they are to be enforceable. Modifying a contract by extending its duration beyond the original agreement would require a written agreement to be enforceable. Therefore, choice A is the correct answer.

Question 18

Which of the following is an interest in real property given to a lender as security for the repayment of a loan?
A)lease
B)mortgage
C)life estate
D)easement

Accepted Answer

A mortgage is an interest in real property given to a lender as security for the repayment of a loan. A lease is a contractual agreement between a landlord and tenant for the use of property, a life estate is an interest in property that ends upon the death of the holder, and an easement is a right to use land owned by another for a specific purpose.

Question 19

The ________ says that agents' contracts to sell property covered by the Statute of Frauds must be in writing to be enforceable.
A)merger clause
B)common law of contracts
C)doctrine of equity
D)equal dignity rule

Accepted Answer

The "equal dignity rule" requires that contracts for the sale of property covered by the Statute of Frauds must be in writing and signed by the party to be charged (in this case, the agent). This applies to contracts made by an agent on behalf of the principal. The other options are not relevant to this specific question.

Question 20

Nina wants to borrow money from Tina but Tina refuses to lend the money unless another person promises to pay the money in case Nina cannot clear the debt.James agrees to pay the debt if Nina does not.James is the ________ in this transaction.
A)creditor
B)debtor
C)guarantor
D)facilitator

Accepted Answer

James is the guarantor, as he is the person who promises to pay the debt if Nina cannot.

Quiz 14: Statute of Frauds and Equitable Exceptions

Which of the following is an instance of a mortgage?

A ________ is a person who agrees to pay a debt if the primary debtor does not.

Section 2-201(1) of the Uniform Commercial Code is the basic Statute of Frauds provision for ________.

The ________ states that an executory contract which cannot be performed by its own terms within one year of its formation must be in writing.

Ida moves to New York from Poland and wants to live in an apartment.However, she does not have sufficient money to buy one.Her colleague Henry allows Ida to live in his old apartment for a year, if she pays him $25, 000.This contract would be considered a(n) ________.

Which of the following is considered "real property?"

A(n) ________ occurs when one person agrees to answer for the debts or duties of another person.

Which of the following statements is true of a guaranty contract?

Which of the following phrases explains the term lease?

Which of the following grants a person the right to use real property for a specified period of time?

Which of the following interests in real property transfers to another person after the present holder's death?

A right to use someone else's land without owning or leasing it is called ________.

The ________ states that if the main purpose of a transaction and an oral collateral contract is to provide pecuniary benefit to the guarantor, the collateral contract does not have to be in writing to be enforced.

Which of the following does the one-year rule state?

In a guaranty situation, the original contract is between the ________.

Good Faith Consultants partnered with QuickFind IT Solutions for a period of six months.After three months, they wanted to extend the contract by two years.According to the Statute of Frauds, which of the following holds true for the contract?

Which of the following is an interest in real property given to a lender as security for the repayment of a loan?

The ________ says that agents' contracts to sell property covered by the Statute of Frauds must be in writing to be enforceable.

Nina wants to borrow money from Tina but Tina refuses to lend the money unless another person promises to pay the money in case Nina cannot clear the debt.James agrees to pay the debt if Nina does not.James is the ________ in this transaction.