LAW OF CONTRACTS Practice Exam 2026
Question and Answer | Updated Review from
Previously Tested Questions | Grade A+
offer -✓✓A proposal by one party to another intended to create a legally binding
agreement. Terms of offer must be clear, definite and certain
• acceptance -✓✓words signifying consent to the terms of an offer (thereby creating a
contract)
• void -✓✓a contract that has no legal force or effect because it does not meet the
essential elements of a contract
• essential elements of contracts -✓✓A contract is a set of promises that are made
voluntarily, for a legal act, between legally competent parties for a consideration. To be
legally enforcable it must be in writing.
• bundle of rights -✓✓the concept of land ownership that includes ownership of all legal
rights to the land- possession, control within the law, enjoyment, exclusion, and
disposition
• unilateral contract -✓✓A contract that results when an offer can only be accepted by
the offeree's performance.
• bilateral contract -✓✓A contract in which each party to the contract promises to
perform some act or duty in exchange for the promise of the other party.
• assignments -✓✓the transfer in writing of interest in a bond, mortgage, lease, or other
instrument
• delegation -✓✓a task or piece of work assigned to someone
• legal value -✓✓Legal proof of authority or business transaction, enforceable rights or
obligations, or the basis for a legal action
• counteroffer -✓✓a new offer made in response to an offer received
• novation -✓✓the replacement of one obligation by another by mutual agreement of
both parties
• expressed contract -✓✓A written or oral agreement in which all terms are explicitly
stated
, • implied contract -✓✓agreement created by actions of the parties involved, but it is not
written or spoken.
• statute of frauds -✓✓A state statute under which certain types of contracts must be in
writing to be enforceable.
• four corners rule -✓✓as derived from the text of the agreement itself, without relying
upon other resources or witnesses.
• reasonable man standard -✓✓the duty to act with the care, prudence, and good
judgment of a reasonable person
• breach/default -✓✓failure to perform according to the terms of the agreement
• specific performance -✓✓a legal action to complet a party to carry out the terms of a
contract
• time is of the essence -✓✓a phrase in a contract that requires the performance of a
certain act within a stated period of time
• land description -✓✓A description or an identification of a specific parcel of land that
may be the subject of a conveyance.
• manufactured housing -✓✓dwellings that are built off-site and trucked to a building lot
where there are installed or assembled
• competent party -✓✓a person who has the capacity to be engaged in a legal contract;
being of sound mind and body
• minority(minors) -✓✓a person who has not yet reached the age of majority and
therefore does not have legal capacity to transfer title to real property
• economic characteristics of real estate -✓✓- scarcity (land is not limitless)
- improvements (can affect values of neighbors, e.g. new mall, toxic waste dump)
- permanence of investment (longterm & relatively stable)
- area preference (location, location, location)
• revocation -✓✓canceling or annulling licensed privileges or rights
• legal entities (corporations, partnerships, limited liability) -✓✓An organization such as
a company or trust fund that the law treats as if it were a person, capable of entering
into contracts and of being sued.
Question and Answer | Updated Review from
Previously Tested Questions | Grade A+
offer -✓✓A proposal by one party to another intended to create a legally binding
agreement. Terms of offer must be clear, definite and certain
• acceptance -✓✓words signifying consent to the terms of an offer (thereby creating a
contract)
• void -✓✓a contract that has no legal force or effect because it does not meet the
essential elements of a contract
• essential elements of contracts -✓✓A contract is a set of promises that are made
voluntarily, for a legal act, between legally competent parties for a consideration. To be
legally enforcable it must be in writing.
• bundle of rights -✓✓the concept of land ownership that includes ownership of all legal
rights to the land- possession, control within the law, enjoyment, exclusion, and
disposition
• unilateral contract -✓✓A contract that results when an offer can only be accepted by
the offeree's performance.
• bilateral contract -✓✓A contract in which each party to the contract promises to
perform some act or duty in exchange for the promise of the other party.
• assignments -✓✓the transfer in writing of interest in a bond, mortgage, lease, or other
instrument
• delegation -✓✓a task or piece of work assigned to someone
• legal value -✓✓Legal proof of authority or business transaction, enforceable rights or
obligations, or the basis for a legal action
• counteroffer -✓✓a new offer made in response to an offer received
• novation -✓✓the replacement of one obligation by another by mutual agreement of
both parties
• expressed contract -✓✓A written or oral agreement in which all terms are explicitly
stated
, • implied contract -✓✓agreement created by actions of the parties involved, but it is not
written or spoken.
• statute of frauds -✓✓A state statute under which certain types of contracts must be in
writing to be enforceable.
• four corners rule -✓✓as derived from the text of the agreement itself, without relying
upon other resources or witnesses.
• reasonable man standard -✓✓the duty to act with the care, prudence, and good
judgment of a reasonable person
• breach/default -✓✓failure to perform according to the terms of the agreement
• specific performance -✓✓a legal action to complet a party to carry out the terms of a
contract
• time is of the essence -✓✓a phrase in a contract that requires the performance of a
certain act within a stated period of time
• land description -✓✓A description or an identification of a specific parcel of land that
may be the subject of a conveyance.
• manufactured housing -✓✓dwellings that are built off-site and trucked to a building lot
where there are installed or assembled
• competent party -✓✓a person who has the capacity to be engaged in a legal contract;
being of sound mind and body
• minority(minors) -✓✓a person who has not yet reached the age of majority and
therefore does not have legal capacity to transfer title to real property
• economic characteristics of real estate -✓✓- scarcity (land is not limitless)
- improvements (can affect values of neighbors, e.g. new mall, toxic waste dump)
- permanence of investment (longterm & relatively stable)
- area preference (location, location, location)
• revocation -✓✓canceling or annulling licensed privileges or rights
• legal entities (corporations, partnerships, limited liability) -✓✓An organization such as
a company or trust fund that the law treats as if it were a person, capable of entering
into contracts and of being sued.
