An agreement that has no legal force or effect from the outset, as if it never existed.
Why Void Contract matters on the exam
This term belongs to Contracts. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Void Contract
Every Freehold question shows why the right answer is right — and cites its source.
A property manager continues collecting a tenant's rent and providing services after a lease expires, with no new written lease, and the tenant keeps paying. The resulting month-to-month arrangement, formed through the parties' conduct rather than express words, is best classified as a(n):
Void contract
Unilateral contract
Implied contract
Voidable contract
Show answer & explanation
Implied contract — An implied contract arises from the conduct of the parties rather than explicit words, such as continuing to accept and pay rent after a lease term ends.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
A typical signed purchase agreement in which the buyer promises to pay and the seller promises to convey title is an example of a:
Unilateral contract
Void contract
An implied contract
Bilateral contract
Show answer & explanation
Bilateral contract — A bilateral contract involves an exchange of mutual promises, with each party obligated to perform; a typical purchase agreement obligates both the buyer and the seller.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
An 'unenforceable' contract, as distinguished from a void contract, is one that:
Never had any of the essential elements a valid contract requires at formation
Automatically becomes fully valid and enforceable in every court once both parties have placed their signatures on the document, regardless of any defense either party might later raise
Is enforceable only against whichever party happens to breach the agreement first
May have contained all essential elements at formation but cannot be enforced in court due to some legal defense, such as failing the statute of frauds
Show answer & explanation
May have contained all essential elements at formation but cannot be enforced in court due to some legal defense, such as failing the statute of frauds — An unenforceable contract may otherwise be valid, but a court will not enforce it because of a legal bar, such as an oral agreement that should have been in writing under the statute of frauds.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
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