Certified Residential Appraiser Practice Exam

A contract that results from the failure of parties to meet legal requirements is known as:

1. Executed contract

2. Voidable contract

3. Implied contract

4. Bilateral contract

The correct answer is: Voidable contract

A voidable contract arises when one or both parties involved have the option to void or cancel the agreement due to specific legal reasons. This situation occurs when certain legal requirements are not met, such as the ability of a party to consent or the presence of a legal capacity to enter into the contract. For instance, if one party is a minor or was misled about the terms of the agreement, they may have the right to void the contract. In contrast, an executed contract refers to an agreement that has been fully performed by all parties. An implied contract arises from the actions or circumstances of the parties, rather than their explicit words. A bilateral contract involves an exchange of promises between two parties, creating mutual obligations. However, neither of these descriptions accounts for the scenario where legal deficiencies provide one party with the ability to void the agreement, making the concept of a voidable contract the most appropriate descriptor.