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 difference between a bilateral and a unilateral contract?

AThe two terms simply describe the exact same kind of legal agreement in practice
BA unilateral contract can never become legally binding
CA bilateral contract is mutual promises; a unilateral is a promise for an act
DA bilateral contract requires three or more parties
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.
Question 2 of 5
Contract Law BasicsMedium

What does 'consideration' mean in contract law?

AThe time a party takes to think over an offer
BSomething of value each party exchanges under the contract
CA polite and considerate tone used throughout a negotiation process
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 3 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
BThere is no legal difference between the two terms
CA void contract has no legal effect; a voidable one is valid until rescinded
DA void contract can still be enforced by either party at will if they choose
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 4 of 5
Contract Law BasicsMedium

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

AA minimum contract length of 30 days
BA notarized signature from both parties
CLegal capacity of both parties to enter into the contract
DFormal approval from a licensed real estate agent beforehand
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 5 of 5
Contract Law BasicsMedium

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

AThat they include a handwritten legal description only
BThat they be in writing to be enforceable
CThat they be reviewed by a judge before signing
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.

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