ContractsIntermediateCalifornia Exam

A voidable contract is one that:

AHas no legal effect from the beginning, consistent with common contract law principles

BMay be affirmed or rejected at the option of one of the partiesCorrect

CIs illegal and unenforceable by any party, per standard contingency and disclosure practice

DMust be canceled by a court order, under standard California purchase contract terms

Why May be affirmed or rejected at the option of one of the parties Is Correct

Answer B: May be affirmed or rejected at the option of one of the parties

A voidable contract is valid and enforceable but may be rescinded by one party due to a defect (such as minority, fraud, duress, or mistake). The party with the right to rescind may choose to affirm or void the contract.

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.

Key Contracts Terms in This Question

Contingency

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

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Key Terms to Know

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.

Right of First Refusal

A contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.

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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