ContractsIntermediateCalifornia Exam

The 'parol evidence rule' states that:

AAll contracts must be notarized

BPrior oral agreements cannot be used to contradict a written contractCorrect

CVerbal contracts for real estate are always enforceable

DEvidence of prior negotiations is always admissible in court

Why Prior oral agreements cannot be used to contradict a written contract Is Correct

Answer B: Prior oral agreements cannot be used to contradict a written contract

The parol evidence rule prevents parties from introducing prior oral or written agreements to contradict or vary the terms of a fully integrated written contract. It encourages parties to include all terms in the final written document.

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.

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.

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.

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