ContractsIntermediateCalifornia Exam

Rescission of a contract means:

AModifying its terms by mutual agreement

BCanceling the contract and restoring the parties to their original positionsCorrect

CAssigning the contract to a third party

DExtending the closing date

Why Canceling the contract and restoring the parties to their original positions Is Correct

Answer B: Canceling the contract and restoring the parties to their original positions

Rescission cancels a contract and places all parties back in their pre-contract positions, including returning any deposits or consideration already exchanged.

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.

People Also Study

Key Terms to Know

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.

Purchase Agreement

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

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.

Study This Topic

Real Estate Contracts Guide

Practice More California Real Estate Questions

1,500+ questions covering all exam topics. Start free — no signup required.

Take the Free California Quiz →