Montana Contracts
Practice Questions & Answers (2026)
Contract law questions on the Montana real estate exam test both general contract principles and Montana-specific transaction requirements. The Montana Board of Realty Regulation tests how Montana contract law applies to purchase agreements, counteroffers, contingencies, and earnest money disputes. Pay close attention to offer and acceptance mechanics, how counteroffers extinguish prior offers, and the specific timelines under Montana law for earnest money handling and contingency resolution. These are areas where candidates who studied nationally often apply the right concept but the wrong MT-specific timeframe or rule.
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Montana Contracts — Practice Questions & Answers
138 questions on Contracts from the Montana real estate question bank. First 10 are free — sign up to unlock all 138.
Q1. For a real estate contract in Montana to be enforceable, it must be:
Explanation
Under Montana's Statute of Frauds, contracts for the sale of real property must be in writing and signed by the parties to be enforceable.
Q2. A buyer submits an offer to purchase. The seller makes changes to the price and signs it. This creates:
Explanation
When a seller modifies any terms of an offer and signs it, this constitutes a counteroffer, which legally voids the original offer and gives the buyer the option to accept, reject, or counter again.
Q3. Earnest money in a Montana real estate transaction is best described as:
Explanation
Earnest money is a good-faith deposit made by the buyer to show serious intent to purchase. It is typically applied toward the purchase price at closing.
Q4. Which contingency protects a buyer if they are unable to obtain financing?
Explanation
A financing contingency allows the buyer to cancel the contract and receive their earnest money back if they are unable to secure acceptable mortgage financing within a specified period.
Q5. In a Montana real estate contract, 'time is of the essence' means:
Explanation
'Time is of the essence' is a contract clause meaning that the specified dates and deadlines are material terms; failure to meet them may constitute a breach of contract.
Q6. A buyer's offer is accepted and they have a signed purchase agreement. Before closing, the seller refuses to proceed. What remedy may be available to the buyer?
Explanation
Specific performance is a legal remedy available in real estate contracts that allows the non-breaching party to compel the breaching party to fulfill the contract terms, since real property is considered unique.
Q7. Which of the following is NOT an essential element of a valid real estate contract in Montana?
Explanation
The essential elements of a valid contract are mutual consent, lawful objective, consideration, and competent parties. Notarization is required to record a deed but is not required for a valid purchase contract.
Q8. A purchase offer states that the seller must accept or reject within 48 hours. The seller does not respond within that period. The offer:
Explanation
An offer that specifies a deadline expires if not accepted within that time. The buyer is released from the offer, and the seller cannot later accept it to create a binding contract.
Q9. A voidable contract is one that:
Explanation
A voidable contract is valid and binding unless one party chooses to disaffirm it. Common examples include contracts entered into by minors or under duress, which the affected party may void.
Q10. An option contract in real estate gives the optionee the:
Explanation
An option contract gives the buyer (optionee) the right — but not the obligation — to purchase property at a specified price within a set time period. The seller (optionor) is bound during that period.
Q11. In a land contract (contract for deed) in Montana:
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