ContractsIntermediateArizona Exam

The parol evidence rule in contract law provides that:

AWritten contracts may always be modified by a subsequent oral agreement

BExtrinsic evidence (prior oral agreements) cannot contradict the terms of a final written contractCorrect

COral contracts for the sale of real estate are always enforceable if both parties agree on the terms

DWritten evidence supersedes oral testimony only in court; outside litigation, oral agreements remain equally binding

Why Extrinsic evidence (prior oral agreements) cannot contradict the terms of a final written contract Is Correct

Answer B: Extrinsic evidence (prior oral agreements) cannot contradict the terms of a final written contract

The parol evidence rule provides that when parties have expressed their agreement in a final written contract, extrinsic evidence of prior or contemporaneous oral agreements cannot be used to contradict the written terms.

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.

Listing Agreement

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

Earnest Money

A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.

Contingency

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

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