Certified Residential Appraiser Practice Exam

What term describes a contract that has been fully performed with all promises fulfilled?

1. Valid Contract

2. Void Contract

3. Unenforceable Contract

4. Novated Contract

The correct answer is: Valid Contract

A contract that has been fully performed, with all parties fulfilling their promises, is referred to as a valid contract. This type of contract is characterized by its legality and enforceability, meaning it meets all the necessary elements of a contract—offer, acceptance, consideration, lawful purpose, and the capacity of parties to enter into the agreement. In this context, a valid contract signifies that both parties have completed their obligations under the terms of the agreement. This completion leads to the contract reaching its intended outcome, typically the delivery of goods or services in exchange for payment. The other terms present in the options refer to different states of contracts that do not indicate full performance. A void contract is one that is not legally enforceable from the moment it is created, often due to illegality or lack of consideration. An unenforceable contract, while it may have been valid at one point, cannot be enforced in a court of law due to certain legal defenses. A novated contract involves replacing one of the parties in a contract with the consent of all parties, which does not inherently relate to the concept of full performance of the original contract. Thus, the correct choice emphasizes full completion and the legal validity of all contractual obligations having been met.