ContractsIntermediateAlabama Exam

A contract for the sale of real estate that does not identify a specific price is generally:

AValid if the parties had a verbal price agreement, in most cases

BUnenforceable because the price (an essential term) is missingCorrect

CValid if the parties agree later

DEnforceable if a broker witnessed the signing

Why Unenforceable because the price (an essential term) is missing Is Correct

Answer B: Unenforceable because the price (an essential term) is missing

A real estate contract must include definite essential terms, including the price. A contract without a specific or determinable price lacks an essential term and is generally unenforceable.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

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Key Terms to Know

Purchase Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

Option Contract

A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.

Listing Agreement

A contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.

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Real Estate Contracts Guide

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