Contracts and Agency Practice Questions for the Texas Exam
Contracts and agency accounts for 16 scored questions on the National portion of the Texas sales agent exam. This free quiz gives you 25 questions on contract terms, consent, remedies and agency duties, with an explanation after each answer. The 10 Texas-law examples below are separate and do not count toward your quiz score.
25 questions on contracts & agency, scored, each with a full explanation after you answer. Every question is also written out below if you would rather study at your own pace.
25 questions
~19 min
National practice only
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Study mode · National principles
Work through the questions at your own pace.
Choose an answer mentally, then open its explanation. Each question has a source and a point to watch. These are original practice questions, not Pearson VUE exam items or a prediction of your result.
1
An oral agreement to sell land
A buyer and seller agree orally to sell a vacant lot. There is no signed writing, payment or transfer of possession. Assume no exception to the Statute of Frauds applies. How is this agreement classified?
A.Void because its purpose is unlawful
B.Voidable only at the seller's election
C.Unenforceable under the writing requirement
D.Enforceable once the parties agree on price
Check answer and explanation
Correct answer: C. Unenforceable under the writing requirement
A land-sale agreement generally needs a signed writing to be enforced against a party. The missing writing makes this agreement unenforceable under the stated facts, not void for an illegal purpose. The parties could still choose to complete the sale.
Why the other choices miss:
A. Void because its purpose is unlawful: Selling the lot is not an unlawful purpose. The stated defect is the missing writing required for enforcement.
B. Voidable only at the seller's election: The writing requirement does not give only the seller a special election to void the agreement. The question excludes an exception.
D. Enforceable once the parties agree on price: Agreement on price does not replace the required signed writing under the stated Statute of Frauds rule.
Watch for this: Do not turn a writing requirement into a rule that every oral agreement is void. This question expressly excludes exceptions.
Rule: Statute of Frauds; Texas illustration: Business & Commerce Code 26.01(a), (b)(4)
Competent parties agree on lawful terms and exchange consideration. One signed only because of an unlawful threat. Which requirement is in doubt?
A.The size of the earnest-money deposit
B.Whether the agreement was voluntary
C.The broker's authority to hold funds
D.Whether the signatures were notarized
Check answer and explanation
Correct answer: B. Whether the agreement was voluntary
An agreement must be voluntary. A signature does not settle that issue if an unlawful threat overcame the person's free choice. Check consent as well as agreement, capacity, consideration and lawful purpose.
Why the other choices miss:
A. The size of the earnest-money deposit: A deposit amount does not resolve whether a party freely agreed. The decisive fact is the unlawful threat.
C. The broker's authority to hold funds: Authority to hold funds is a different issue. The threat puts voluntary consent in doubt.
D. Whether the signatures were notarized: Notarization does not cure duress. A verified signature can still have been obtained through an unlawful threat.
Watch for this: Do not substitute a deposit, a broker or notarization for voluntary consent.
Rule: Contract formation: offer and acceptance, voluntary consent; duress
A buyer offers $320,000. The seller rejects it and sends a $335,000 counteroffer. The buyer replies, 'I will pay $330,000.' What is the buyer's reply?
A.An acceptance because the price increased
B.A revival of the rejected $320,000 offer
C.A new counteroffer awaiting acceptance
D.An acceptance subject to a financing term
Check answer and explanation
Correct answer: C. A new counteroffer awaiting acceptance
The buyer changed the price instead of accepting the seller's terms. That reply is another counteroffer. No agreement on price has been reached in this exchange.
Why the other choices miss:
A. An acceptance because the price increased: Increasing the price does not accept the seller's $335,000 terms. The buyer proposed a different price.
B. A revival of the rejected $320,000 offer: The seller rejected the original offer. The buyer's new $330,000 proposal does not automatically revive it.
D. An acceptance subject to a financing term: The response changes price and contains no financing term. It is a new proposal awaiting acceptance.
Watch for this: A better price is not necessarily an acceptance. Ask whether the response accepts the offered terms or changes them.
An unemancipated 16-year-old signs a purchase contract for an investment lot. It is not a contract for necessaries, and no statutory exception applies. Under the general infancy rule, the contract is
A.void from the moment both parties sign it
B.voidable at the election of the minor
C.binding if the adult seller paid a broker
D.voidable at the adult seller's election
Check answer and explanation
Correct answer: B. voidable at the election of the minor
The ordinary infancy rule gives the minor a right to disaffirm. It does not give the adult the same right or make every minor's agreement automatically void. The facts exclude exceptions so the question tests the basic capacity rule.
Why the other choices miss:
A. void from the moment both parties sign it: Voidable differs from void. Under the stated infancy rule, the minor can choose to disaffirm rather than the contract never existing.
C. binding if the adult seller paid a broker: Paying a broker does not cure the minor's capacity issue. The scenario excludes an applicable exception.
D. voidable at the adult seller's election: The ordinary infancy rule protects the minor. It does not grant the adult seller the same right to disaffirm.
Watch for this: Identify who the law protects. Voidable means that party has a choice, not that the agreement never existed.
A seller refuses to close a valid land-sale contract. The buyer is ready and able to perform and wants the property, not just compensation. Which remedy should the buyer ask a court to consider?
A.Specific performance
B.Compensatory damages
C.Mutual rescission
D.Liquidated damages
Check answer and explanation
Correct answer: A. Specific performance
Specific performance asks the court to require the promised performance. It may be appropriate for a land sale because money may not replace the particular property. It is equitable relief, not an automatic award to every disappointed buyer.
Why the other choices miss:
B. Compensatory damages: Compensatory damages seek money for loss. The buyer wants the promised conveyance of this particular property.
C. Mutual rescission: Mutual rescission ends the agreement by consent. It does not require the seller to convey the property.
D. Liquidated damages: Liquidated damages are a stipulated monetary remedy. They do not supply the conveyance the buyer seeks here.
Watch for this: Seeking a remedy and qualifying for it are different. The court considers the facts and the requirements for that relief.
An owner and broker sign a listing agreement authorizing the broker to market the property for the owner. How was the agency relationship created?
A.Ratification of an unauthorized act
B.Estoppel based on a third party's belief
C.Express agreement between the parties
D.Implication from the parties' conduct
Check answer and explanation
Correct answer: C. Express agreement between the parties
The parties directly agreed to the representation. That is express agency. Agency inferred from conduct is implied; ratification involves approval of an earlier unauthorized act.
Why the other choices miss:
A. Ratification of an unauthorized act: Ratification approves an earlier unauthorized act. Here the parties directly agreed to representation before the described work.
B. Estoppel based on a third party's belief: Estoppel concerns a principal being prevented from denying authority in relevant circumstances. This relationship rests on a direct agreement.
D. Implication from the parties' conduct: Implied agency is inferred from conduct. The signed listing expressly states the authority given.
Watch for this: Look at how authority was given. A direct agreement is different from conduct that merely suggests an agreement.
A seller's agent tells a buyer the seller's confidential minimum price without permission. Which duty most directly concerns that disclosure?
A.Accounting for client funds
B.Obedience to lawful instructions
C.Confidentiality of client information
D.Reasonable care in evaluating offers
Check answer and explanation
Correct answer: C. Confidentiality of client information
The seller's private bargaining position is confidential. Sharing it without permission can harm the client. That is different from withholding a material property defect, which cannot be hidden behind confidentiality.
Why the other choices miss:
A. Accounting for client funds: Accounting concerns records and entrusted funds. The disclosed fact here is the seller's private negotiating position.
B. Obedience to lawful instructions: Obedience concerns following lawful client instructions. Confidentiality most directly addresses revealing the minimum price.
D. Reasonable care in evaluating offers: Reasonable care matters, but this question asks about unauthorized disclosure of confidential information, not an evaluation error.
Watch for this: Protecting a negotiating position does not excuse deception about the property.
A buyer transfers contract rights to another buyer. The seller then joins both buyers in a replacement agreement that releases the original buyer from further liability. What accomplished the release?
A.Novation
B.Assignment
C.Subrogation
D.Ratification
Check answer and explanation
Correct answer: A. Novation
Novation replaces an obligation or party with the required agreement and releases the original obligation. Assignment alone does not release the original party from contractual duties. The express release is the decisive fact here.
Why the other choices miss:
B. Assignment: Assignment transfers rights. It does not alone provide the seller's agreement releasing the original buyer from duties.
C. Subrogation: Subrogation concerns stepping into another's rights in a different legal setting. The replacement agreement and release identify novation.
D. Ratification: Ratification approves a prior act. It is not the replacement agreement that releases an original obligor here.
Watch for this: Transferring rights and being released from obligations are not the same thing.
Rule: Assignment and novation; Seagull Energy v. Eland Energy
The sole purpose of an agreement is an activity prohibited by law. No exception or lawful part can be separated from it. How is the agreement classified?
A.Void for an unlawful purpose
B.Voidable only by the buyer
C.Valid once consideration is paid
D.Executory until a court cancels it
Check answer and explanation
Correct answer: A. Void for an unlawful purpose
A contract cannot require an unlawful act as its purpose. Under these facts, the agreement is void. Payment does not cure that defect, and executory only describes performance still due.
Why the other choices miss:
B. Voidable only by the buyer: The defect is an unlawful purpose, not a protection giving only the buyer a choice. No lawful severable part is present.
C. Valid once consideration is paid: Paying consideration does not make a prohibited purpose lawful. All essential validity requirements still matter.
D. Executory until a court cancels it: Executory describes remaining performance. It does not cure the agreement's unlawful purpose.
Watch for this: Do not confuse a defect in validity with an unfinished obligation.
A buyer pays for an option that requires the owner to keep a sale offer open for 30 days. The buyer has not promised to purchase. In standard real-estate exam terminology, this option is
A.unilateral: the buyer need not purchase
B.bilateral: the buyer must purchase later
C.implied: the option fee replaces assent
D.executed: the purchase is fully performed
Check answer and explanation
Correct answer: A. unilateral: the buyer need not purchase
The owner must keep the offer open for the agreed time, while the buyer may choose whether to purchase. This is commonly taught as a unilateral option. Exercising it is separate from buying the option right.
Why the other choices miss:
B. bilateral: the buyer must purchase later: The buyer has purchased a choice, not promised to buy the property. The owner must keep the offer open as agreed.
C. implied: the option fee replaces assent: The parties expressly agreed to the option. Paying its fee does not replace assent or make the agreement implied.
D. executed: the purchase is fully performed: Buying the option right does not fully perform a property purchase. The buyer has not even exercised that right.
Watch for this: Do not confuse a purchase option with an unrestricted termination option inside a Texas purchase contract.
Both parties have signed a valid sales contract. Payment and delivery of the deed are still due. When classifying the contract by performance, it is
A.executed
B.rescinded
C.voidable
D.executory
Check answer and explanation
Correct answer: D. executory
Executory means obligations remain to be performed. In this classification, executed means fully performed. The word executed can also mean signed in another context, which is why the question specifies performance.
Why the other choices miss:
A. executed: Signing is one meaning of executed, but this question expressly classifies performance. Payment and deed delivery remain due.
B. rescinded: The facts describe an ongoing valid agreement, not an agreement that has been rescinded.
C. voidable: Unfinished performance does not itself make a contract voidable. No defect giving a party that choice is stated.
Watch for this: Read the context before choosing a definition of executed.
Rule: Contract classification; executed versus executory
A sales contract states that, after a buyer default, the seller may terminate and retain the earnest money as agreed damages. What is the name of that stipulated remedy?
A.Compensatory damages proved at trial
B.Specific performance of the sale
C.Restitution of the buyer's payment
D.Liquidated damages fixed by agreement
Check answer and explanation
Correct answer: D. Liquidated damages fixed by agreement
Liquidated damages are an amount or formula agreed in advance for a breach. That identifies the remedy; it does not establish that every such clause is enforceable. A clause operating as an unlawful penalty can still be challenged.
Why the other choices miss:
A. Compensatory damages proved at trial: Compensatory damages are based on proven loss. The described remedy was fixed by the parties in advance.
B. Specific performance of the sale: Specific performance seeks the promised performance, rather than termination and retention of an agreed sum.
C. Restitution of the buyer's payment: Restitution would restore a payment or benefit. This clause allows the seller to retain the payment as agreed damages.
Watch for this: A contract's label does not remove judicial review. Also distinguish this remedy from a refund or a claim for specific performance.
An owner revokes a broker's ordinary listing authority before the listing expires. No agency coupled with an interest is involved. Which statement is most accurate?
A.Revocation can end authority yet breach the agreement
B.Revocation always eliminates any commission obligation
C.The broker must keep acting until the original end date
D.The buyer becomes the broker's principal upon revocation
Check answer and explanation
Correct answer: A. Revocation can end authority yet breach the agreement
The power to end an ordinary agency relationship is different from the contractual right to do so without consequences. Revocation may end actual authority while leaving a dispute over fees or damages. The agreement and applicable law govern that dispute.
Why the other choices miss:
B. Revocation always eliminates any commission obligation: Ending authority does not automatically discharge every fee or damages obligation. The listing terms and applicable law still matter.
C. The broker must keep acting until the original end date: Ordinary actual authority can end through revocation. The original expiry date does not necessarily authorize continued action afterward.
D. The buyer becomes the broker's principal upon revocation: Revocation does not turn a buyer into the broker's principal. A new agency relationship needs its own basis.
Watch for this: Ending authority does not automatically erase promises already made in the listing agreement.
A financing contingency permits termination and an earnest-money refund if approval fails and the buyer gives timely notice with required lender documentation. Approval fails despite reasonable effort. The buyer meets both notice requirements. What follows under that clause?
A.The buyer must replace the loan with cash
B.The deposit becomes damages for the seller
C.The lender must fund the purchase anyway
D.The buyer may terminate and recover the deposit
Check answer and explanation
Correct answer: D. The buyer may terminate and recover the deposit
The buyer has met the conditions that the clause sets for termination and a refund. Failure to obtain a loan alone is not enough if a contract also requires action by a deadline. Here, the required action was taken.
Why the other choices miss:
A. The buyer must replace the loan with cash: The stated contingency supplies a termination right when its conditions are met. It does not require substituting a cash purchase.
B. The deposit becomes damages for the seller: The buyer satisfied the clause's termination and refund requirements. The scenario does not make the deposit seller damages.
C. The lender must fund the purchase anyway: A financing contingency does not force a lender to fund. It defines the buyer's rights when approval fails.
Watch for this: Separate the failed condition from the steps needed to exercise the right it creates.
Assume the ordinary Statute of Frauds rule requires a writing for land sales and leases longer than one year, with no exception applicable. All leases begin immediately. Which agreement requires a signed writing?
A.A six-month residential lease
B.A month-to-month rental agreement
C.A nine-month commercial lease
D.A three-year residential lease
Check answer and explanation
Correct answer: D. A three-year residential lease
The three-year lease exceeds one year. The other listed terms do not. This question specifies immediate commencement because a separate rule can cover agreements that cannot be performed within a year of being made.
Why the other choices miss:
A. A six-month residential lease: This immediate six-month term does not exceed one year under the rule supplied in the question.
B. A month-to-month rental agreement: This immediate month-to-month arrangement is not the stated three-year commitment. The question excludes another writing requirement.
C. A nine-month commercial lease: Commercial use alone does not make this immediate nine-month term longer than one year.
Watch for this: The lease term and the time from making the agreement to completing it are different measurements.
Rule: Statute of Frauds; Texas illustration: Business & Commerce Code 26.01(b)(5), (6)
A property manager and a cleaner verbally agree on a fee and the work to be done. No rule requires this particular service agreement to be written. How was the agreement expressed?
A.By implication, because it was not written
B.Expressly, because the terms were spoken
C.By estoppel, because services have value
D.By ratification, because both parties agreed
Check answer and explanation
Correct answer: B. Expressly, because the terms were spoken
Express terms can be stated orally or in writing. An implied-in-fact contract is inferred from conduct rather than words stating the agreement. Whether a writing is required is a separate question.
Why the other choices miss:
A. By implication, because it was not written: An express agreement can be spoken. Lack of a writing does not automatically make the agreement implied.
C. By estoppel, because services have value: The scenario describes stated terms and assent, not reliance supplying an estoppel theory.
D. By ratification, because both parties agreed: Ratification approves an earlier act. A direct verbal agreement on fee and work is express agreement.
Watch for this: Express does not mean written only.
A buyer obtains a seller's signature through an unlawful threat that overcomes the seller's free choice. The facts establish duress. Which statement best describes the seller's position?
A.The seller may seek to avoid the agreement
B.The seller is bound because the price is fair
C.The agreement becomes a unilateral option
D.The signature cures the threat's legal effect
Check answer and explanation
Correct answer: A. The seller may seek to avoid the agreement
Duress can make a contract voidable by the threatened party. A fair price or a signature does not cure the lack of voluntary consent. Ordinary pressure to accept a lower price is not, by itself, proof of duress.
Why the other choices miss:
B. The seller is bound because the price is fair: A fair price does not cure an unlawful threat overcoming free choice. The question expressly establishes duress.
C. The agreement becomes a unilateral option: Duress affects voluntary consent. It does not convert the agreement into an option to purchase.
D. The signature cures the threat's legal effect: A signature obtained through duress does not cure that duress. The threatened party may seek to avoid the agreement.
Watch for this: The decisive fact is the unlawful threat overcoming free choice, not simply an unfavorable bargain.
A seller promises to convey a lot and a buyer promises to pay the agreed price. All other requirements are met. The contract does not require an earnest-money deposit. Which statement is correct?
A.Only a cash deposit can supply consideration
B.The broker's commission supplies consideration
C.The exchange of promises supplies consideration
D.Consideration arises only when the deed is delivered
Check answer and explanation
Correct answer: C. The exchange of promises supplies consideration
Consideration can be an exchange of binding promises. Earnest money is not the same thing as consideration. A separate obligation to deliver a deposit matters if the contract actually includes one.
Why the other choices miss:
A. Only a cash deposit can supply consideration: Binding promises can supply consideration. A cash deposit is not the only possible exchange of value.
B. The broker's commission supplies consideration: The relevant exchange is between buyer and seller. The broker's commission is a separate obligation.
D. Consideration arises only when the deed is delivered: Consideration can exist when binding promises are exchanged, before payment and conveyance are completed.
Watch for this: No required deposit is different from failing to pay a deposit the parties promised to deliver.
Parties agree to use electronic records and valid electronic signatures for an otherwise enforceable purchase agreement. Can the agreement be denied legal effect solely because it is electronic?
A.Yes, because land-sale agreements require ink
B.No, but only if the broker also signs the agreement
C.Yes, unless a paper copy is recorded before closing
D.No, electronic form alone does not invalidate it
Check answer and explanation
Correct answer: D. No, electronic form alone does not invalidate it
Electronic form alone is not a reason to deny legal effect to an agreement or signature under the applicable electronic-transactions rules. Assent, attribution, required content and other contract requirements still matter.
Why the other choices miss:
A. Yes, because land-sale agreements require ink: The applicable electronic-transactions rules do not require ink solely because the agreement concerns a land sale.
B. No, but only if the broker also signs the agreement: The broker's signature is not a condition for recognizing the parties' valid electronic agreement under these facts.
C. Yes, unless a paper copy is recorded before closing: Recording a paper copy is not what makes electronic form legally recognizable. Other contract requirements still apply.
Watch for this: Electronic does not mean exempt from the usual requirements, and a typed name is not automatically proof of another person's assent.
A buyer has a valid, enforceable contract entitling the buyer to obtain a deed when the agreed conditions are met. Before the deed transfers legal title, the buyer's contractual interest is generally described in real-estate exam terminology as
A.legal title free of all existing liens
B.equitable title under the purchase agreement
C.a leasehold created by the purchase deposit
D.a recorded ownership interest in fee simple
Check answer and explanation
Correct answer: B. equitable title under the purchase agreement
Equitable title describes the buyer's interest under the enforceable agreement, distinct from the seller's legal title before conveyance. It does not automatically authorize early possession or erase conditions that still must be met.
Why the other choices miss:
A. legal title free of all existing liens: A contract right to obtain a deed is not legal title free of existing liens. The deed has not transferred legal title.
C. a leasehold created by the purchase deposit: A purchase deposit does not automatically create a leasehold. The scenario describes a right under a purchase agreement.
D. a recorded ownership interest in fee simple: The facts do not state a recorded conveyance of fee-simple title. The purchase agreement creates a different interest.
Watch for this: A right to acquire title is not the same as already holding the deed or having permission to move in.
A broker is authorized to market one property and bring offers to its owner, but not to sign the owner's sales contract. This limited, transaction-specific authority is typically classified as
A.universal agency over the owner's affairs
B.general agency over an ongoing business
C.special agency for the assigned transaction
D.dual agency arising from contact with buyers
Check answer and explanation
Correct answer: C. special agency for the assigned transaction
A special agent handles a limited task or transaction. Authority to market property does not itself give the broker authority to sign the owner's contract. The extent of authority comes from the authorization, not the job title alone.
Why the other choices miss:
A. universal agency over the owner's affairs: Universal agency reaches far beyond this one marketing assignment. The broker's stated authority is limited.
B. general agency over an ongoing business: General agency describes continuing authority within a business role. This authorization concerns a specific transaction.
D. dual agency arising from contact with buyers: Contact with buyers does not itself create dual representation. Agency classification here concerns the owner's limited authorization.
Watch for this: Representing an owner and having power to bind that owner by signature are different.
An owner authorizes a manager to collect rent, arrange routine repairs and renew leases within stated limits for an apartment property. Which agency classification best fits this continuing business role?
A.General agency within the management role
B.Special agency limited to a single sale
C.Universal agency over all the owner's affairs
D.Intermediary agency between every tenant and owner
Check answer and explanation
Correct answer: A. General agency within the management role
A general agent can carry out a range of ongoing acts within an assigned business or role. The manager is still bound by the agreement's limits. This does not grant authority over every aspect of the owner's life or finances.
Why the other choices miss:
B. Special agency limited to a single sale: A continuing range of management tasks is broader than the single-sale assignment described by this option.
C. Universal agency over all the owner's affairs: The authority is limited to the management role and its stated terms. It does not extend to every personal affair.
D. Intermediary agency between every tenant and owner: Representing the owner in management does not automatically create representation of tenants or an intermediary relationship.
Watch for this: General authority is broader than one task, but it is not unlimited authority.
Under a seller-financed agreement, the buyer takes possession and makes installments. The seller retains legal title until the purchase price is paid as agreed. What arrangement is described?
A.A lease with no promise to convey title
B.A cash sale with a delayed recording date
C.A deed conveyed now with a mortgage back
D.A contract for deed, or installment land contract
Check answer and explanation
Correct answer: D. A contract for deed, or installment land contract
A contract for deed separates installment payments and possession from the later transfer of legal title. This question identifies the arrangement, not the seller's remedies. State protections and restrictions must be checked separately.
Why the other choices miss:
A. A lease with no promise to convey title: The agreement promises later title transfer. That distinguishes it from a lease with no conveyance obligation.
B. A cash sale with a delayed recording date: The seller retains legal title while installments are paid. This is not a completed cash sale awaiting recording.
C. A deed conveyed now with a mortgage back: A deed now with a mortgage back transfers legal title now. The stated arrangement postpones that transfer.
Watch for this: Do not assume the seller can keep every payment or remove the buyer immediately after a default.
Rule: Sales contracts; seller financing and installment land contracts
An agent receives funds connected with a client's transaction. Which action best fulfills the duty of accounting?
A.Treat the funds as earned compensation on receipt
B.Document and safeguard the funds as required
C.Hold the funds personally until the client asks
D.Use the funds temporarily and replace them later
Check answer and explanation
Correct answer: B. Document and safeguard the funds as required
Accounting includes keeping accurate records and handling entrusted funds according to the agreement and applicable rules. Client funds do not become the agent's money simply because the agent received them.
Why the other choices miss:
A. Treat the funds as earned compensation on receipt: Receipt does not turn entrusted funds into earned compensation. The funds must be handled for their proper purpose.
C. Hold the funds personally until the client asks: Holding transaction funds personally until asked does not fulfill the safeguarding and handling requirements.
D. Use the funds temporarily and replace them later: Temporary personal use is not proper accounting. Intending to replace the funds does not authorize the withdrawal.
Watch for this: An intention to replace money later does not make personal use of entrusted funds proper.
Rule: Fiduciary duties; accounting for entrusted funds
After noticing a foundation crack, a buyer asks the agent whether the home is structurally sound. The agent is not qualified to make that determination. What is the best response?
A.Give reassurance based on the home's recent paint
B.Guarantee soundness if the seller says it is safe
C.Recommend a qualified assessment without guessing
D.Offer an engineering opinion with a verbal disclaimer
Check answer and explanation
Correct answer: C. Recommend a qualified assessment without guessing
Reasonable care includes recognizing the limits of your expertise. The agent should not invent an engineering conclusion. Directing the buyer to a qualified professional helps the buyer investigate the concern.
Why the other choices miss:
A. Give reassurance based on the home's recent paint: Recent paint does not establish structural soundness. It cannot support the technical assurance the buyer requests.
B. Guarantee soundness if the seller says it is safe: The seller's reassurance does not qualify the agent to guarantee the structure. A qualified assessment addresses the concern.
D. Offer an engineering opinion with a verbal disclaimer: A verbal disclaimer does not create engineering competence. The agent should avoid an unsupported technical opinion.
Watch for this: A disclaimer does not turn an unsupported technical opinion into reliable advice.
Rule: Fiduciary duties; reasonable care and competence
An unlawful purpose, a protected party's right to avoid an agreement and a missing required writing are different defects. Read the stated exception assumptions.
Revoking ordinary agency authority may leave contractual fee or damages questions. Check the agreement rather than assuming every obligation disappears.
A single transaction differs from continuing business duties. Neither classification gives unlimited authority to sign or act beyond the authorization.
The scored quiz tests National principles. The ten Texas examples below it apply specific state forms and rules and do not affect your National quiz score.
Optional supplement · Texas-specific applications
10 Texas rules to keep separate.
These examples require Texas form or statutory knowledge. They are not included in the National quiz or its score. If you only need National practice, you can skip to the study resources.
1
No option-fee amount
On TREC Form 20-19, the parties enter seven option days but leave the option-fee amount blank. The buyer tries to use the unrestricted termination option on day four. Which statement is correct?
A.The seven-day entry alone creates the option
B.The entire purchase contract becomes void
C.The buyer keeps the option by forfeiting earnest money
D.The buyer lacks the unrestricted Paragraph 5 right
Check answer and explanation
Correct answer: D. The buyer lacks the unrestricted Paragraph 5 right
Paragraph 5D removes the unrestricted Paragraph 5 termination right if no option-fee amount is stated. The contract does not become void. Other termination rights may exist if their separate conditions are met.
Why the other choices miss:
A. The seven-day entry alone creates the option: The seven-day entry does not supply the missing option-fee amount. Paragraph 5D addresses that omission directly.
B. The entire purchase contract becomes void: Loss of the unrestricted option right does not void the entire purchase agreement. Other obligations remain.
C. The buyer keeps the option by forfeiting earnest money: Forfeiting earnest money does not create the missing unrestricted Paragraph 5 termination right.
Watch for this: The day count alone is not enough. Do not turn loss of this option into loss of every possible contractual remedy.
A Texas broker represents a seller. A buyer now asks that broker to represent the buyer in the same transaction. What must the broker do if agreeing to represent both?
A.Use ordinary dual agency after oral disclosure
B.Follow the statutory intermediary requirements
C.Appoint one agent to advise both parties equally
D.Treat written consent as optional if fees are disclosed
Check answer and explanation
Correct answer: B. Follow the statutory intermediary requirements
Texas requires the intermediary framework when a broker agrees to represent both parties. This includes each party's written consent and the required compensation-source information. The broker may decline the second representation instead.
Why the other choices miss:
A. Use ordinary dual agency after oral disclosure: Ordinary dual agency with oral disclosure does not satisfy Texas's statutory intermediary requirements.
C. Appoint one agent to advise both parties equally: One agent advising both parties equally does not replace the required intermediary framework and appointment limits.
D. Treat written consent as optional if fees are disclosed: Fee disclosure does not make written consent optional. Each represented party must give the required written consent.
Watch for this: Calling the arrangement dual agency does not replace Texas intermediary requirements.
D.Equal shares to each obligation until funds run out
Check answer and explanation
Correct answer: B. Option fee, earnest money, additional earnest money
Paragraph 5A(3) applies receipts first to the option fee, then earnest money, then additional earnest money. That ordering does not guarantee the entire option fee was paid or that payment was timely.
Why the other choices miss:
A. Earnest money, option fee, additional earnest money: The form puts the option fee ahead of earnest money. Reversing those two obligations changes the required allocation.
C. Additional earnest money, earnest money, option fee: Additional earnest money is last in the stated order. It does not take priority over the option fee and initial earnest money.
D. Equal shares to each obligation until funds run out: The form specifies an order of application rather than equal shares. An insufficient payment must still be allocated in that order.
Watch for this: Allocation order and compliance with amount and deadline requirements are separate checks.
The earnest-money delivery deadline has expired. The buyer then delivers the funds to escrow before the seller gives notice under Paragraph 5C. Can the seller use that paragraph to terminate for this late delivery?
A.Yes, any late payment makes termination automatic
B.Yes, provided closing has not occurred yet
C.No, the notice had to precede delivery of the funds
D.No, earnest-money deadlines are never enforceable
Check answer and explanation
Correct answer: C. No, the notice had to precede delivery of the funds
Paragraph 5C requires notice before the buyer delivers the earnest money. In this sequence the funds arrived first, so that late-payment remedy is no longer available. This says nothing about a different breach or separate termination right.
Why the other choices miss:
A. Yes, any late payment makes termination automatic: A missed deadline does not make termination automatic. Paragraph 5C requires notice before the earnest money arrives.
B. Yes, provided closing has not occurred yet: The deciding event is delivery before notice, not whether closing has occurred. That sequence defeats this particular remedy.
D. No, earnest-money deadlines are never enforceable: The deadline is enforceable, but exercising this remedy has its own timing condition. That condition was not met here.
Watch for this: A missed deadline and a timely exercise of a remedy are different facts.
Both parties sign intermediary consent, but the consent omits the source of the broker's expected compensation. What is missing?
A.Notarization of both parties' signatures
B.An agreement to divide compensation equally
C.A required statement of the compensation source
D.A promise that the seller alone will pay the broker
Check answer and explanation
Correct answer: C. A required statement of the compensation source
Section 1101.559(a) requires written consent from each party that states the source of expected compensation. Signatures alone do not supply the omitted information.
Why the other choices miss:
A. Notarization of both parties' signatures: Notarization does not provide the missing compensation-source statement. The issue is required content, not signature verification.
B. An agreement to divide compensation equally: The law requires identifying the expected compensation source. It does not require equal sharing between the parties.
D. A promise that the seller alone will pay the broker: The statute does not require the seller to be the payer. It requires the written consent to state the expected source.
Watch for this: The rule requires disclosure of the source, not a particular payer or equal split.
The parties authorize intermediary appointments in writing. The broker appoints different agents but never gives the parties written notice of the appointments. What remains required?
A.A separate brokerage license for each appointed agent
B.A notarized acceptance from each appointed agent
C.Written notice of the appointments to all parties
D.Oral notice only to the party paying the commission
Check answer and explanation
Correct answer: C. Written notice of the appointments to all parties
Authorization and notice are separate requirements under Section 1101.560(b). The broker needs both. A properly appointed license holder may provide opinions and advice to the party they serve within the statutory framework.
Why the other choices miss:
A. A separate brokerage license for each appointed agent: A separate brokerage license for each appointee does not replace notice to the parties identifying the appointments.
B. A notarized acceptance from each appointed agent: Notarized acceptance by the agents is not the missing statutory step. The parties need written appointment notice.
D. Oral notice only to the party paying the commission: Notice must be written and reach all parties as required. Oral notice to only the payer does not satisfy that duty.
Watch for this: Permission to appoint does not tell the parties who was appointed.
An agent who does not represent the seller prepares a non-representation agreement solely to show residential property to a prospective buyer under Section 1101.562. It is exclusive and lasts 30 days. Which correction is required?
A.Keep exclusivity but shorten the term to 14 days
B.Make it non-exclusive and no longer than 14 days
C.Keep the term but replace exclusivity with non-exclusivity
D.Keep both terms if the buyer separately initials them
Check answer and explanation
Correct answer: B. Make it non-exclusive and no longer than 14 days
Section 1101.563(e) requires this non-representation agreement to be non-exclusive and limits its termination date to 14 days from entry. A representation agreement with limited showing services is different. TREC also distinguishes open houses hosted by the listing brokerage.
Why the other choices miss:
A. Keep exclusivity but shorten the term to 14 days: Shortening the term alone leaves the prohibited exclusivity in this non-representation showing agreement.
C. Keep the term but replace exclusivity with non-exclusivity: Removing exclusivity alone leaves a 30-day term exceeding the stated statutory limit. Both defects need correction.
D. Keep both terms if the buyer separately initials them: Separate initials do not waive the non-exclusivity and maximum-term requirements for this agreement.
Watch for this: Do not apply this 14-day limit to every buyer-representation agreement or claim that every open-house visitor must sign one.
Which duty is not one of the four duties printed under the broker's minimum duties heading on IABS 1-2, even though it remains an important duty?
A.Putting the client's interests above the broker's
B.Informing the client of material information received
C.Treating all parties to the transaction honestly and fairly
D.Keeping the client's confidential information private
Check answer and explanation
Correct answer: D. Keeping the client's confidential information private
Confidentiality is not one of the four bullets in that heading. The remaining printed duty concerns answering client questions and presenting offers or counteroffers. The notice is not an exhaustive list of every obligation; confidentiality also has statutory protection in the intermediary setting.
Why the other choices miss:
A. Putting the client's interests above the broker's: Putting the client's interests first is one of the four printed duties. This option does not identify an omitted bullet.
B. Informing the client of material information received: Informing the client of received material information is expressly included in the printed minimum-duties list.
C. Treating all parties to the transaction honestly and fairly: Honest and fair treatment of all parties is expressly included in that heading. It is not the omitted duty.
Watch for this: Not printed in this particular list does not mean not required.
A seller's agent receives a transaction-related question from the buyer's agent. Under TREC Rule 535.157, the seller's agent must respond within
A.two calendar days
B.two business days
C.three calendar days
D.three business days
Check answer and explanation
Correct answer: A. two calendar days
The rule specifies two calendar days. It covers communications from the principal, a license holder representing another party, and an unrepresented party. It is not limited to messages from the agent's own client.
Why the other choices miss:
B. two business days: The rule says calendar days. Using business days would exclude days the rule includes.
C. three calendar days: Three calendar days gives more time than the two-calendar-day response requirement.
D. three business days: This changes both the number and the type of days. The rule requires two calendar days.
Watch for this: Calendar days and business days are not interchangeable.
A seller agreed in writing that offers need not be submitted after the seller enters a contract. The seller is now under contract and a new offer arrives. Under Rule 535.156, must the agent submit it?
A.Yes, because the instruction must be renewed for each offer
B.No, the rule's written-agreement exception applies
C.Yes, if the new offer contains a larger earnest deposit
D.No, all later offers are exempt even without instructions
Check answer and explanation
Correct answer: B. No, the rule's written-agreement exception applies
Both conditions are present: the seller's written agreement and an accepted contract. The rule removes the duty to submit later offers in that situation. Without the required written agreement, being under contract alone does not create this exception.
Why the other choices miss:
A. Yes, because the instruction must be renewed for each offer: The stated written agreement need not be renewed separately for every later offer under this exception.
C. Yes, if the new offer contains a larger earnest deposit: The exception does not turn on a larger earnest-money deposit. Both the written agreement and accepted contract are present.
D. No, all later offers are exempt even without instructions: Being under contract alone is insufficient. The required written agreement is the other deciding condition.
Watch for this: The rule does not prohibit useful advice. It defines when this particular offer-submission duty no longer applies.
One more distinction: seller default is not just a refund.
Paragraph 15 of TREC Form 20-19 gives the buyer alternatives when the seller defaults: seek specific performance or other available legal relief, or terminate and receive the earnest money. The refund is not the buyer's only possible remedy.
The official topic has 16 scored items. The counts below describe our 25-question sample, not a promise of which questions you will see. The Texas bonus examples are excluded.
Contracts & Agency: official allocation and free practice coverage
National subtopic
Exam items
Our questions
Types of contracts
1
2
Required elements of a valid contract
3
5
Contract performance
3
7
Sales contract
2
4
Types of agency and licensee-client relationships
2
2
Creation and termination of agency
2
2
Licensee obligations to parties of a transaction
3
3
A sample is not complete coverage of every possible question. See Pearson VUE's Salesperson outline, section IV. Sources beside each answer explain the underlying principle. Texas-specific rules and examples link to their own authority.
Before choosing an answer, identify the job: forming a contract, performing it, ending it or acting for a client. Then look for the fact that changes the rule, such as a counteroffer, a missed deadline or a limit on the agent's authority.
Use the quiz without notes first. In the explanations, name why your choice worked or failed. A second attempt on these same questions can check your recall, but unfamiliar questions are a better check of whether you can apply the idea.
Choose what to study next.
Start with the lesson behind a missed question, then try another problem without notes.
Are these National questions or Texas State Law questions?
The scored quiz contains 25 National contracts and agency questions. The 10 separately labeled Texas examples cover state forms and rules. They are not part of your National quiz score. General principles may be illustrated with a Texas source, but the National quiz does not ask you to recall Texas-only form numbers or deadlines.
How many contracts and agency questions are on the actual exam?
The published National outline assigns 16 scored items to Contracts and Agency. Our 25-question set samples its seven broad subtopics, not every possible exam question. The Texas State Law portion is scored separately.
Are these actual Pearson VUE questions or a passing-score prediction?
No. These are original practice questions, not released or recalled Pearson VUE items. Their difficulty has not been calibrated against the live exam. Your result describes this set only; it is not a prediction of passing.
Can I keep studying in the web app or on my phone?
Yes. Open the web app or choose the mobile app from the download page. A free account includes selected activities; full access is paid. This topic-quiz score stays on this page and cannot yet be saved to your account. Note the topics you want to review before leaving. Practice completed inside the app is saved when you sign in.
Sources and review notes
Last reviewed: . The National questions teach general contract and agency principles. Cornell Wex supplies legal definitions; the cited court opinions and statutes illustrate the underlying law, which can vary by jurisdiction. The separate Texas examples use TRELA, TREC rules and official forms. Pearson supplies the syllabus, not these original questions. This page is exam preparation, not advice for a transaction.
Use the source beside an answer to check the specific rule. Cornell Law's Wex entries explain general legal concepts; they are not Texas statutes or Pearson VUE answer keys.
