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What Is an Option Contract? - Example & Definition

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Bob wants to purchase Nancy's home but needs financing. Nancy signed an option contract with Bob. While Bob secures the financing, Nancy finds a cash buyer who wants to make the purchase immediately. Which scenario is most likely to follow?

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1. In an option contract, consideration is _____.

2. Mary gave Dennis a deposit for a car she planned to purchase. She never returned for the car and the contract terms expired, but she mailed him a letter requesting her deposit back. What is likely to happen?

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About This Quiz & Worksheet

There are many types of contracts. This quiz/worksheet combo will help test your understanding of option contracts in business law. You'll be tested on areas that include formation of an option contract, consideration, and elements of an option contract in real estate.

Quiz & Worksheet Goals

These assessments will test you on the following aspects of option contracts:

  • Formation of a contract
  • Remedies after contract expiration
  • Elements of option contracts in real estate

Skills Practiced

This quiz and worksheet allow students to test the following skills:

  • Distinguishing differences - compare and contrast topics from the lesson, such as option contract and letter of intent
  • Information recall - access the knowledge you've gained regarding consideration
  • Knowledge application - use your knowledge to answer questions about the elements of an option contract in real estate transactions

Additional Learning

To learn more about option contracts, review the accompanying lesson titled What Is an Option Contract? - Example & Definition. This lesson covers the following topics:

  • Definition and formation of option contracts
  • What happens when a contract expires
  • Elements of an option contract in real estate transactions
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