Contract Law & Agreement Drafting Flashcards
7 cards from real CNE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Contract Law & Agreement Drafting flashcards as text
What is a 'contingency clause' in a real estate purchase agreement?
Answer: A condition that must be met for the contract to become binding
A contingency clause specifies a condition—such as financing approval or a satisfactory inspection—that must be fulfilled before the contract is legally obligated to proceed.
Which of the following is NOT a required element for a contract to be legally enforceable?
Answer: Notarization
The essential elements of a valid contract are offer, acceptance, consideration, and mutual assent; notarization is typically not required for enforceability unless specified by statute.
In contract law, 'consideration' is best defined as:
Answer: Something of value exchanged between parties to a contract
Consideration is the bargained-for exchange that each party gives to the other, which can be money, services, property, or a promise to act or refrain from acting.
What does 'time is of the essence' mean when included in a real estate contract?
Answer: All deadlines in the contract are strictly enforced and material
When 'time is of the essence' is specified, all dates and deadlines are treated as strict conditions, and failure to meet them may constitute a material breach allowing the other party to terminate.
Which type of contract clause limits a buyer's remedy if the seller defaults to retaining the earnest money deposit?
Answer: Liquidated damages clause
A liquidated damages clause pre-determines the amount of damages for breach; in many real estate contracts this caps the buyer's remedy at forfeiting or recovering the earnest money deposit.
An 'as-is' clause in a purchase contract primarily serves to:
Answer: Shift the risk of known and unknown property defects to the buyer
An 'as-is' clause means the buyer accepts the property in its current condition, transferring the risk of defects to the buyer, although sellers typically still must disclose known material defects.
A contract modification that changes one party's obligations must generally include what to be enforceable?
Answer: New consideration from the party benefiting from the change
Contract modifications generally require new or additional consideration from the party seeking the benefit of the change; otherwise the modification may lack mutuality and be unenforceable.