4.Contracts and Contract Law Quiz

Question 1 of 40

1. Question

What is NOT one of the essential elements of a valid contract?

Mutual consent

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Physical documentation

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Consideration

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Lawful object

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Question 2 of 40

2. Question

Which element is crucial for the legality of a contract?

High value of consideration

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Presence of witnesses during signing

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Lawful purpose

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Notarization of the contract

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Question 3 of 40

3. Question

Under the Statute of Frauds, which contract must be in writing to be enforceable?

Sale of personal property under $500

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Employment contracts not exceeding one year

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Leases shorter than one year

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Real estate transactions

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Question 4 of 40

4. Question

What best defines a smart contract that may legally be used in real estate transactions in Arizona?

A contract that automatically adjusts its terms based on market conditions

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A digital contract that executes and enforces itself via blockchain technology

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A contract with intelligent clauses that favor the buyer

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An eco-friendly contract with minimal paper usage

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Question 5 of 40

5. Question

In Arizona real estate contracts, when must the agency agreements be signed?

At any time up to or before the deed transfer.

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These must be signed on the day of the first encounter with the client.

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At the same time the documents are drawn up.

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As soon as practical to ensure all parties know of the agreements.

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Question 6 of 40

6. Question

How does bankruptcy affect real estate contracts?

It invalidates all existing contracts immediately

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It has no impact on real estate contracts

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It may negate an agency relationship, preventing parties from performing

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It automatically transfers property ownership to the bankruptcy trustee

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Question 7 of 40

7. Question

In Arizona real estate, Dual Agency is allowed. When representing both parties in a real estate contract, what forms must be included for the brokers files?

Dual Agency signed by your client.

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Buyers agency and election forms.

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Sellers agency and election forms.

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Dual agency signed by all parties.

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Question 8 of 40

8. Question

When a seller is unable to sell due to an unknown IRS lien being found during escrow, who would most likely be granted the earnest money?

This would be most likely provided to the sellers.

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Most of the time this would be provided to the buyers.

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This is up for dispute and the brokers would need to discuss and resolve.

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This is up to the escrow/title agency but is most likely going to go back to the buyer.

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Question 9 of 40

9. Question

In which of the following cases would a contract that was fully executed and reviewed by the broker be unenforceable?

Where a clause that makes the seller obligated to close early was written into the offer.

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Where the buyer who agreed to make their earnest money non-refundable lost their job and could not perform.

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When the seller was informed of several clouds on title and could not obtain clear title.

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The buyer was not able to qualify for the home since their contingent sale fell out of escrow and never closed.

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Question 10 of 40

10. Question

In Arizona, a counter offer was presented to the other agent, but no response ever came and after multiple attempts were made, the agent has the right to approach the seller after how much time has passed?

72 hours

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48 hours

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24 hours

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This is not allowed under statutory laws in Arizona.

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Question 11 of 40

11. Question

Which scenario would likely result in a breach of contract in real estate transactions?

The buyer fails to secure financing by the agreed-upon date.

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The seller decides to include additional fixtures not previously listed.

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The real estate agent advises the buyer to request an inspection.

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Closing is delayed due to a backlog at the title company.

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Question 12 of 40

12. Question

A purchase contract that has a response time of 48 hours is finally responded to after the 3rd day with an acceptance of all terms in it’s existing state. What is the status of the offer?

This can be rescinded.

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The buyer can accept this offer as it was accepted in it’s existing state.

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The contract is voidable by the buyers.

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The contract is void in it’s current state.

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Question 13 of 40

13. Question

Which of the following real estate contracts are considered unilateral?

A leasee maintains the premesis according to the lease terms.

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A buyer agreed to buy after the seller gave concessions to the original offer.

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A seller is obligated to make repairs as agreed upon in the BINSR in the contracts.

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A seller is obligated to sell if a buyer exercised their option to buy.

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Question 14 of 40

14. Question

When does a seller have to respond to any offer made in real property in the State of Arizona?

All offers must be communicated back in Arizona within 48 hours.

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The seller must be given at least a 24 hour time frame to reply in Arizona.

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Per the Arizona Revised Statutes, a seller must respond within the contracts terms.

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A seller needs to respond in the time of acceptance period and if not, the contract is void.

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Question 15 of 40

15. Question

What determines the legal capacity to enter into a real estate contract?

Being of legal age and sound mind.

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Holding a valid real estate license.

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Previous experience in buying or selling property.

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Membership in a professional real estate association.

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Question 16 of 40

16. Question

Under what condition can a real estate contract be terminated without penalty by either party?

If there is a mutual agreement to do so.

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The property value decreases before closing.

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A better offer is received from another buyer.

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The buyer decides not to move to the area.

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Question 17 of 40

17. Question

What role does an addendum play in a real estate contract?

It serves as a legal way to terminate the contract.

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It outlines the penalties for breach of contract.

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It allows for the original contract terms to be modified or additional terms to be added.

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It reduces the commission payable to real estate agents.

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Question 18 of 40

18. Question

A bank is listing a recently foreclosed property in Yavapai County, Arizona. The bank has zero knowledge of the property and does not include or complete a Seller Disclosure at all. What is the satus of this listing?

The listing is void.

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The listing is voidable.

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The broker listing the property can be held liable for failing to provide seller disclosures.

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The listing is valid, leaving the seller open to failing to disclose.

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Question 19 of 40

19. Question

When a broker is reviewing a commercial contract for a property located in Pinal county, Arizona, she notices that the agent who is representing the buyer is a residential agent. What effect does this have on the broker review?

The broker is obligated to inform her seller, the commercial property owner, of this.

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The listing broker is obligated to notify the buyer’s agent broker of this discrepancy.

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The listing broker is able to assign this contract to another agent in the same firm.

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The listing broker is only obligated to review for accuracy and completeness.

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Question 20 of 40

20. Question

In a real estate contract, what happens if a buyer fails to perform due diligence within the specified time frame?

The contract is automatically extended to allow more time for due diligence.

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The buyer can terminate the contract without penalty.

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The buyer is limited to reviewing only the Seller Disclosures at this time.

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The contract would continue in it’s current state.

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Question 21 of 40

21. Question

When a buyer, represented by an agent who specialized in agricultural farm lands failes to open escrow with the buyers funds for earnest money, what options does the seller have?

A clause can be invoked allowing the removal of earnest monies to be deposited.

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The broker can contribute to the earnest money in an effort to keep the contract alive.

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A breach of contract has occurred and the buyer can legally terminate the offer.

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A cure notice should be sent by the sellers agent.

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Question 22 of 40

22. Question

When three buyers are looking to make offers on the same property, what can a sellers broker do that is both legal and allowed in Arizona?

An opportunity to all parties to submit their highest and best offer before a certain time.

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A multiple counter offer form can be sent to each perspective buyer.

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A seller can choose to work with only one party.

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All of these are allowed.

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Question 23 of 40

23. Question

What does a right of first refusal clause in a lease agreement imply?

The tenant must refuse the first offer to buy additional space.

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The landlord must first offer the property to the tenant before selling to others.

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The tenant has the right to refuse any changes to the original lease terms.

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The landlord can refuse the tenant’s first offer to renew the lease.

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Question 24 of 40

24. Question

Arizona uses both mortgages and deeds of trust for financing instruments however most lenders prefer to use a deed of trust. Due to this, Arizona is known as what type of State?

Title Theory State

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Lender Deed Theory State

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Loan Option Theory State

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Lien Theory State

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Question 25 of 40

25. Question

Which of the following could be considered consideration in a real estate contract in Arizona?

An object to trade that has a value of $40,000.

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The love and affection of a family member.

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A cashiers check in the amount of $40,000.

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All of these are considered consideration.

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Question 26 of 40

26. Question

What is the significance of a “satisfaction clause” in a real estate purchase contract?

It guarantees the seller will be satisfied with the buyer’s financing arrangements.

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It allows the buyer to back out if they are not satisfied with the property inspection.

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It ensures the real estate agent is satisfied with the commission amount.

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It mandates that both parties must be satisfied with minor contract details.

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Question 27 of 40

27. Question

In what scenario could a real estate contract be deemed voidable?

If one party was a minor at the time of signing.

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When the property in question is not zoned for residential use.

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If the contract was signed by a seller with power of attorney.

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When the buyer decides not to proceed for personal reasons.

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Question 28 of 40

28. Question

How might a force majeure clause in a real estate contract protect the parties involved?

By allowing an increase in the purchase price if market conditions improve.

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By providing an extension of deadlines in the event of unforeseen disasters.

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By forcing the parties to complete the transaction within the original timeline.

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By mandating arbitration in the case of any contractual disputes.

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Question 29 of 40

29. Question

An agent who is representing a client in the sale of a small mutli family was just informed that their client is unable to perform. At the risk of losing their earnest money, the client suggests substituing parties using what possible technique?

This would only be possible with permission from the brokers.

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This would not be possible as the contract is between buyer and seller only.

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This is possible to substitue a party with only an addendum.

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This is possible using novation and an agreement signed by all parties.

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Question 30 of 40

30. Question

When may an agency agreement not be valid?

When it is signed by both parties.

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Upon discovery that the client does not have the financial means.

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When this is a written agreement between the original parties.

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Upon discovery that the client was not legally able to enter into agreement.

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Question 31 of 40

31. Question

What is an essential element for the validity of a contract?

High value

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Legal purpose

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Multiple witnesses

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Public notarization

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Question 32 of 40

32. Question

Which party is typically responsible for providing consideration in a contract?

The offeror only

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The offeree only

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Both the offeror and offeree

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The government

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Question 33 of 40

33. Question

What must be true for a contract to be enforceable under the Statute of Frauds?

It must be notarized

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It must be in writing

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It must be witnessed by two people

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It must be verbally agreed upon

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Question 34 of 40

34. Question

What is the role of electronic signatures in contract law?

They are not legally recognized

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They carry the same weight as handwritten signatures

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They are only valid in certain states

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They are less secure than handwritten signatures

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Question 35 of 40

35. Question

How does bankruptcy typically affect real estate contracts?

It invalidates all existing contracts

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It has no impact on contracts

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It may negate an agency relationship, preventing performance

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It automatically transfers property ownership

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Question 36 of 40

36. Question

What is the significance of time is of the essence in a real estate contract?

It indicates that deadlines are flexible

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It signifies that the contract has no expiration date

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It means deadlines within the contract must be strictly observed

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It implies the contract is valid indefinitely

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Question 37 of 40

37. Question

A seller has reviewed multiple offers and wishes to pursue one specific offer, but, they want to make changes to the terms. When can a counteroffer be created?

After the original offer has been accepted

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When the original offer is slightly modified

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Upon the rejection of the original offer and proposing a new one

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Counteroffers are not recognized in contract law

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Question 38 of 40

38. Question

What determines if an official offer to purchase real property can be rescinded?

If it has been more than 24 hours since the offer was made

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Once the offeree has seen the offer

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Before the offer has been accepted

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Offers cannot be rescinded once made

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Question 39 of 40

39. Question

When purchasing commercial real estate, most often a buyer or buyers agent would produce a _____________ to the seller to show interest in moving forward with a sale.

Purchase agreement

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Letter of intent

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Warranty deed

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Title insurance

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Question 40 of 40

40. Question

A breach of contract would usually mean one party failed to perform and in which case, the other party is entitled to what?

A penalty for contract breach

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A lis pendens against the breaching party

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A legal formula based on actual damages incurred

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A liquidated damages that was agreed upon in the contract

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4.Contracts and Contract Law Quiz

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