Texas Real Estate Exam
Free Preview · national-contracts Contract Law Basics · 5 Questions · 10 min
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Question 1 of 5
Contract Law BasicsMedium

What is the key difference between a void contract and a voidable contract?

AA voidable contract is always void from the start
BA void contract can still be enforced by either party at will if they choose
CA void contract has no legal effect; a voidable one is valid until rescinded
DThere is no legal difference between the two terms
Explanation
A void contract never had legal effect to begin with — it's treated as if it never existed. A voidable contract is valid and enforceable unless and until the party with the right to do so elects to rescind it. The two aren't interchangeable, and a void contract by definition can't be enforced by anyone.
Question 2 of 5
Contract Law BasicsMedium

What does the Statute of Frauds generally require for real estate contracts?

AThat they be reviewed by a judge before signing
BThat they include a handwritten legal description only
CThat they be in writing to be enforceable
DThat they be renewed every 90 days to stay valid
Explanation
The Statute of Frauds requires certain contracts — including those for the sale of real estate — to be in writing to be enforceable, precisely because real estate deals are significant enough that a verbal agreement isn't considered reliable proof. It doesn't require judicial pre-review, a handwritten-only format, or periodic renewal.
Question 3 of 5
Contract Law BasicsMedium

Which of these is one of the essential elements required for a legally valid contract?

AFormal approval from a licensed real estate agent beforehand
BA notarized signature from both parties
CLegal capacity of both parties to enter into the contract
DA minimum contract length of 30 days
Explanation
Legal capacity — each party being legally able to enter into a binding agreement (of sound mind, of legal age) — is one of the essential elements of a valid contract, alongside offer, acceptance, and consideration. Notarization, agent approval, and a minimum duration are not universal requirements for contract validity.
Question 4 of 5
Contract Law BasicsMedium

What does 'consideration' mean in contract law?

AA polite and considerate tone used throughout a negotiation process
BThe time a party takes to think over an offer
CSomething of value each party exchanges under the contract
DA discount applied to the final agreed price
Explanation
Consideration is the legal term for the value each party gives up or promises under a contract (money, a service, a promise) — it has nothing to do with politeness, deliberation time, or a price discount, despite the everyday meaning of the word.
Question 5 of 5
Contract Law BasicsMedium

What is the difference between a bilateral and a unilateral contract?

AThe two terms simply describe the exact same kind of legal agreement in practice
BA bilateral contract is mutual promises; a unilateral is a promise for an act
CA bilateral contract requires three or more parties
DA unilateral contract can never become legally binding
Explanation
A bilateral contract involves an exchange of mutual promises (both sides promise something), while a unilateral contract is a promise made in exchange for someone actually performing an act — a reward contract is a classic unilateral example. Neither requires three-plus parties, and a unilateral contract absolutely can become binding once the act is performed.

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