- Official section
- National V: Contracts
- Broker weight
- Approximately 19 of 100 scored national questions
- Expected scored items
- The current PSI broker outline assigns about 19% of the national portion to Contracts, the largest national area
National practice guide
Build the timeline before naming the contract result
Contract questions reward sequence. An offer exists, something happens, and a party acts or fails to act. If you skip the timeline, a revoked offer looks accepted, a request looks like a counteroffer, a waived contingency looks open, and a signed but unperformed agreement looks fully executed. Put every event in order before choosing the doctrine. A reliable scratch-work line has five stops: what existed before the event, what the event changed, when the other party learned or acted, which deadline or condition applied, and what remained afterward. Read dates, delivery language, signatures, notices, and conditional words literally. If two choices name true rules, prefer the one that answers the contract's status at the moment the question asks. This habit also keeps you from importing a later closing result into an earlier offer question. Practice explaining the rejected choice in one sentence under timed conditions. That explanation exposes whether you confused formation with enforceability, acceptance with performance, or breach with the remedy that may follow it.
Last updated: August 1, 2026
What skill does this practice set measure?
Short answer: Use a contract timeline: invitation or negotiation, offer, delivery, knowledge, acceptance, rejection, counteroffer, revocation, expiration, death or incapacity, formation, contingency deadlines, amendments, performance, breach, remedy, and termination. At every point, identify the parties, exact terms, legal capacity, lawful purpose, consideration, writing or signature issue, authority, notice, and condition. Then classify status: valid, void, voidable, unenforceable, unilateral, bilateral, express, implied, executed, or executory. Keep document changes distinct: an addendum adds to an agreement, an amendment changes an existing contract, assignment transfers rights, delegation transfers duties, and novation substitutes with release as agreed. Contract language and governing law control real transactions, so use national exam principles without inventing an automatic remedy or state rule.
Contract law varies by jurisdiction and document. Statutes of frauds, electronic signatures, licensing law, approved forms, attorney-review provisions, disclosure statutes, consumer rules, financing, title, escrow, lease law, and local custom can change the result. A broker must practice within license and legal-advice boundaries. This guide teaches the current national outline and selected Illinois context; it does not draft, interpret, approve, rescind, enforce, or advise on a contract. The signed agreement and current law control actual rights and remedies. Sources were checked through August 1, 2026.
Ready to work the set?
These questions are original study items aligned to the published outline. They are not copied, recalled, or predicted PSI questions.
1. A seller changes the offered price before signing. What is the seller's response?
- Counteroffer
- Acceptance
- Inquiry
- Novation
Show answer and explanation
Answer: Counteroffer
A conditional change to a material term proposes a new offer and rejects the original under the common exam rule.
2. Which contract status means material duties remain?
- Executory
- Executed
- Void
- Rescinded
Show answer and explanation
Answer: Executory
An executory contract has performance still due.
3. Which transaction substitutes a new party and releases the original party as agreed?
- Novation
- Assignment
- Addendum
- Counteroffer
Show answer and explanation
Answer: Novation
Novation involves agreed substitution and release rather than a rights transfer alone.
4. Which remedy seeks the promised performance rather than a money award?
- Specific performance
- Liquidated damages
- Compensatory damages
- Earnest money credit
Show answer and explanation
Answer: Specific performance
Specific performance is equitable relief compelling contract performance when legally available.
5. Which right can generally be exercised on stated terms during its option period without waiting for the owner to decide to sell?
- Option
- Right of first refusal
- License
- Easement
Show answer and explanation
Answer: Option
An option grants a time-limited power to purchase on stated terms.
Which answer habits should you watch for?
- Trap
- Call every signed contract executed.
- Correction
- In performance-status questions, executed means fully performed.
- Trap
- Treat void and unenforceable as synonyms.
- Correction
- No legal effect differs from an enforcement defense to an agreement.
- Trap
- Assume earnest money is required for every valid contract.
- Correction
- Look for legal consideration; earnest money amount and use are separate.
- Trap
- Treat every question as a counteroffer.
- Correction
- Distinguish conditional changed terms from an inquiry.
- Trap
- Accept an offer after it expired without a new offer.
- Correction
- Track expiration and any later revival or new assent.
- Trap
- Assume the highest offer must win.
- Correction
- The seller evaluates terms and may accept, reject, or counter within duties and instructions.
- Trap
- Call every contract attachment an amendment.
- Correction
- An addendum can add terms; an amendment changes existing terms.
- Trap
- Release an assignor automatically.
- Correction
- A novation or other agreement is needed for the stated substitution and release.
- Trap
- Ignore a contingency's notice deadline.
- Correction
- Apply the event, protected party, deadline, notice, waiver, and consequence together.
- Trap
- Treat liquidated damages as automatically enforceable.
- Correction
- Contract language and governing law control validity and election.
- Trap
- Treat specific performance as automatic.
- Correction
- It is an equitable remedy subject to legal standards and court discretion.
- Trap
- Call a right of first refusal an immediately exercisable option.
- Correction
- The right usually awaits the owner's triggering decision to sell.
How should you reason through a difficult item?
Track a counteroffer
Scenario: Buyer offers $400,000. Seller signs only if price becomes $415,000. Buyer later says she accepts the original $400,000 offer. Is the original automatically open?
- Seller's conditional change to price is a counteroffer.
- A true counteroffer rejects the original under the common exam rule.
- The original does not revive automatically; a new offer or renewed assent would be needed.
Answer: No. The $415,000 counteroffer ended the original offer under the stated rule.
Distinguish an inquiry
Scenario: Seller receives a $400,000 offer and asks, 'Would the buyer consider closing one week later?' without conditioning acceptance. Is that necessarily a counteroffer?
- The seller asks for information rather than expressly requiring a changed term.
- A request or inquiry does not necessarily reject the offer.
- The exact language and later action determine whether acceptance occurs.
Answer: No. The question can be an inquiry rather than a counteroffer.
Classify performance status
Scenario: Buyer and seller signed a valid purchase agreement, but financing, title, closing, payment, and deed delivery remain. Is it executed or executory in the performance-status sense?
- Signatures can establish the agreement.
- Material obligations remain for both parties.
- The tested performance status is executory until full performance.
Answer: The contract is executory.
Separate assignment and novation
Scenario: A party transfers contractual rights to another person, but the other contracting party never agrees to release the original party's duties. Is release automatic?
- The facts describe a transfer of rights.
- No agreement to substitute and release is stated.
- Assignment alone does not create an automatic novation or release of every obligation.
Answer: No. The facts support assignment, not an automatic novation.
Analyze a financing contingency
Scenario: A contract gives buyer a financing contingency, a written-notice deadline, and a stated termination right if financing is not obtained. The deadline passes without the required notice. What controls?
- Identify whom the contingency protects and the exact deadline.
- The contract requires written notice as part of exercising the right.
- The consequence depends on waiver, satisfaction, extension, and other language in the agreement.
Answer: Apply the contract's notice, deadline, waiver, and consequence terms; do not assume automatic termination.
Distinguish option and first refusal
Scenario: Owner grants Tenant a 60-day right to buy for $300,000 whether or not Owner wants to sell. Which right is described?
- Tenant can exercise during a fixed period on stated terms.
- The right does not wait for Owner's decision to sell.
- Those facts fit an option rather than a right of first refusal.
Answer: Tenant holds an option to purchase.
How do you answer Contracts practice questions?
- Write every event in chronological order, including delivery, knowledge, acceptance, revocation, deadlines, notice, performance, and breach.
- Name the parties and their roles: offeror, offeree, buyer, seller, optionor, optionee, assignor, assignee, landlord, tenant, or beneficiary.
- Test formation, capacity, legality, consideration, writing, authority, consent, and definiteness separately.
- Classify the contract and its current status before deciding what a party may do next.
- For any changed document or party, track terms, rights, duties, consent, release, and signature.
- For contingencies, identify the event, deadline, protected party, notice, waiver, satisfaction standard, and stated consequence.
- For breach, match the harmed party and contract language to a potentially available legal or equitable remedy.
- State the answer at the exact time asked and explain why the strongest timeline or status distractor fails.
- Event
- Offeree changes a material term
- Likely effect
- Counteroffer
- Question to ask
- Original rejected?
- Event
- Offeree asks for clarification
- Likely effect
- Inquiry
- Question to ask
- Conditional acceptance?
- Event
- Offeror revokes before effective acceptance
- Likely effect
- Offer ends
- Question to ask
- Notice and option?
- Event
- Acceptance matches offer
- Likely effect
- Formation possible
- Question to ask
- Effective when?
- Event
- Contingency deadline passes
- Likely effect
- Contract-defined effect
- Question to ask
- Waived or failed?
- Event
- Rights transferred
- Likely effect
- Assignment
- Question to ask
- Duties or prohibition?
- Event
- New party substitutes and original released
- Likely effect
- Novation
- Question to ask
- All required agreement?
- Event
- All parties fully perform
- Likely effect
- Executed
- Question to ask
- Any duty remains?
- Event
- Material default
- Likely effect
- Breach analysis
- Question to ask
- Remedy and notice?
- Event
- Owner decides to sell
- Likely effect
- ROFR may trigger
- Question to ask
- Terms and holder response?
Which outline areas does this set sample?
- Topic
- Contract elements
- What to know
- Competent parties, offer, acceptance, mutual assent, lawful purpose, consideration, definite terms, authority, writing, signature, and delivery
- Best exam move
- Identify which element or enforceability requirement the facts challenge.
- Topic
- Bilateral and unilateral contracts
- What to know
- Promise for promise, promise for performance, acceptance, completion, revocation, option, brokerage agreement, reward, and no label shortcut
- Best exam move
- Ask whether acceptance occurs through a return promise or requested performance.
- Topic
- Express and implied contracts
- What to know
- Words, oral, written, conduct, implication in fact, agreement, performance, unjust enrichment distinction, and evidence
- Best exam move
- Identify whether assent is stated in words or inferred from conduct.
- Topic
- Validity and enforceability
- What to know
- Valid, void, voidable, unenforceable, illegal purpose, incapacity, mistake, fraud, duress, undue influence, statute of frauds, and defense
- Best exam move
- Classify the defect and identify which party may assert it.
- Topic
- Offer requirements
- What to know
- Offeror, offeree, definite terms, intent, communication, duration, invitation, advertisement, earnest money, signature, and delivery
- Best exam move
- Confirm a present commitment with sufficiently definite terms reached the offeree.
- Topic
- Offer termination
- What to know
- Revocation, rejection, counteroffer, expiration, lapse, death, incapacity, illegality, destruction, option, notice, and timing
- Best exam move
- Place termination and attempted acceptance in chronological order.
- Topic
- Acceptance
- What to know
- Unequivocal, mirror image, authorized method, communication, knowledge, mailbox rule, receipt, signature, performance, and late acceptance
- Best exam move
- Check whether acceptance matched the offer and became effective under the supplied rule.
- Topic
- Counteroffers and inquiries
- What to know
- Changed term, conditional acceptance, rejection, new offer, original offer, question, clarification, multiple counteroffers, and revival
- Best exam move
- Distinguish a proposed change from a request for information.
- Topic
- Multiple offers
- What to know
- Presentation, seller decision, confidentiality, disclosure, fairness, timing, highest offer, best terms, counteroffer, acceptance, and no automatic priority
- Best exam move
- Apply duties and instructions without assuming the first or highest offer must be accepted.
- Topic
- Consideration and earnest money
- What to know
- Bargained exchange, promise, act, forbearance, value, adequacy, earnest money, deposit, no formation requirement assumption, and evidence
- Best exam move
- Separate legal consideration from the optional or negotiated amount of earnest money.
- Topic
- Writing and electronic signatures
- What to know
- Statute of frauds, real estate interest, signed writing, essential terms, electronic record, electronic signature, consent, attribution, retention, and exception
- Best exam move
- Identify the applicable writing issue without assuming electronic form is invalid solely because it is electronic.
- Topic
- Contingencies and conditions
- What to know
- Financing, inspection, appraisal, title, sale of property, condition precedent, condition subsequent, deadline, notice, satisfaction, waiver, and failure
- Best exam move
- Identify the event, benefiting party, deadline, required notice, and contractual consequence.
- Topic
- Addenda and amendments
- What to know
- Addendum, attachment, additional term, amendment, modification, existing agreement, signatures, consideration, conflict, priority, and integration
- Best exam move
- Ask whether the document adds terms at formation or changes the existing contract later.
- Topic
- Assignment, delegation, and novation
- What to know
- Assignor, assignee, rights, delegator, delegatee, duties, consent, release, substitution, material change, and prohibition
- Best exam move
- Track rights, duties, consent, and whether the original party remains liable.
- Topic
- Performance status
- What to know
- Executed, executory, substantial performance, full performance, tender, closing, time is of essence, default, and remaining duty
- Best exam move
- Use executed and executory in the performance-status sense stated by the exam.
- Topic
- Breach and remedies
- What to know
- Material breach, anticipatory breach, damages, liquidated damages, specific performance, rescission, restitution, mitigation, election, and equitable discretion
- Best exam move
- Match the breach, contract term, harmed party, and available remedy without assuming automatic relief.
- Topic
- Ending a contract
- What to know
- Performance, mutual agreement, rescission, cancellation, termination, expiration, impossibility, operation of law, breach, contingency failure, and release
- Best exam move
- Name the ending mechanism and whether it unwinds, stops future duties, or follows completion.
- Topic
- Options, first-refusal rights, and leases
- What to know
- Optionor, optionee, option consideration, unilateral right, exercise, deadline, right of first refusal, triggering decision, lease option, lease purchase, rent, and purchase duty
- Best exam move
- Identify when the purchase right arises and whether exercise is optional or already obligatory.
What should you sort out before you begin?
- Terms
- Valid vs. enforceable
- Difference
- Validity concerns contract formation and substance. Enforceability asks whether a court will provide a remedy despite a defense or formal defect.
- Question cue
- Agreement exists versus remedy available.
- Terms
- Void vs. voidable
- Difference
- A void agreement has no legal effect. A voidable contract remains effective unless the protected party avoids it.
- Question cue
- No contract versus election to avoid.
- Terms
- Voidable vs. unenforceable
- Difference
- Voidable gives a protected party the power to avoid. Unenforceable describes a valid-looking agreement blocked from judicial enforcement by a defense.
- Question cue
- Party election versus enforcement bar.
- Terms
- Bilateral vs. unilateral
- Difference
- A bilateral contract exchanges promises. A unilateral contract accepts through requested performance.
- Question cue
- Promise for promise versus promise for act.
- Terms
- Counteroffer vs. inquiry
- Difference
- A counteroffer proposes changed terms as a condition of agreement. An inquiry seeks information without necessarily rejecting.
- Question cue
- Conditional change versus question.
- Terms
- Addendum vs. amendment
- Difference
- An addendum adds terms or material to an agreement. An amendment changes existing terms after formation.
- Question cue
- Added attachment versus later modification.
- Terms
- Assignment vs. novation
- Difference
- Assignment transfers rights and may leave obligations. Novation substitutes with the agreement and release described.
- Question cue
- Transfer versus replacement and release.
- Terms
- Executed vs. executory
- Difference
- Executed means fully performed in the tested status sense. Executory means material duties remain.
- Question cue
- Complete versus pending performance.
- Terms
- Liquidated damages vs. specific performance
- Difference
- Liquidated damages use an agreed sum subject to enforceability. Specific performance is equitable relief compelling promised performance when available.
- Question cue
- Money clause versus court-ordered performance.
- Terms
- Option vs. right of first refusal
- Difference
- An option gives a time-limited power to buy on stated terms. A right of first refusal usually arises when the owner decides to sell on acceptable terms.
- Question cue
- Immediate exercise right versus sale-decision trigger.
How should you review your results?
- Session
- Session 1
- Focus
- Build formation and status
- Proof you are ready
- Classify 40 element, capacity, legality, consideration, writing, valid, void, voidable, unenforceable, bilateral, and unilateral scenarios.
- Session
- Session 2
- Focus
- Track offers and acceptance
- Proof you are ready
- Write timelines for 40 offer, delivery, revocation, rejection, counteroffer, inquiry, expiration, acceptance, and multiple-offer questions.
- Session
- Session 3
- Focus
- Practice contingencies and changes
- Proof you are ready
- Map event, deadline, notice, waiver, consequence, addendum, amendment, assignment, delegation, and novation in 30 scenarios.
- Session
- Session 4
- Focus
- Classify performance and ending
- Proof you are ready
- Separate executed, executory, performance, breach, expiration, rescission, cancellation, termination, impossibility, and release.
- Session
- Session 5
- Focus
- Practice remedies and special contracts
- Proof you are ready
- Compare damages, liquidated damages, specific performance, options, first-refusal rights, lease options, and lease purchases without automatic-remedy claims.
- Session
- Session 6
- Focus
- Complete mixed Contracts practice
- Proof you are ready
- Score at least 85% on two fresh timed sets and explain timeline, status, right, duty, remedy, and closest distractor for every uncertain item.
Do not count recognition as mastery. Close the notes and explain the rule, apply it to a new fact pattern, and identify why each distractor fails.
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Questions students ask about Real Estate Contracts Practice Questions: Illinois Exam Guide
How many Contracts questions are on the national real estate exam?
The PSI broker outline effective June 24, 2026 assigns approximately 19 of 100 scored national questions to Contracts. It is the largest national area, so formation, status, timing, performance, and remedies deserve sustained mixed practice.
What Contract topics are tested?
The current outline covers contract elements, validity, enforceability, offers, counteroffers, multiple offers, acceptance, communication, contingencies, conditions, performance, breach, remedies, assignment, novation, termination, options, rights of first refusal, purchase contracts, lease contracts, and related transaction documents.
What are the elements of a valid contract?
A common exam framework looks for legally competent parties, offer and acceptance or mutual agreement, lawful purpose, and consideration. Writing and signature may affect enforceability under a statute of frauds rather than the abstract existence of every contract. Use the governing law and exact question.
What is the difference between void and voidable?
A void agreement has no legal effect from the outset. A voidable contract is valid unless the protected party elects to avoid it. An unenforceable agreement may be valid in substance but cannot be enforced because of a legal defense such as failure to satisfy an applicable writing requirement.
Does a counteroffer reject the original offer?
Under the common exam rule, a true counteroffer rejects the original offer and proposes new terms. A request for information does not necessarily do so. Identify whether the offeree conditionally accepted or merely asked a question, and track any later revival as a new offer rather than automatic resurrection.
What is the difference between assignment and novation?
Assignment transfers contractual rights, and delegation can transfer duties, subject to the agreement and law. Novation substitutes a new party or obligation with the required agreement and releases the original obligation as stated. Assignment alone does not automatically release the assignor from every duty.
What is the difference between executed and executory?
An executed contract has been fully performed by all parties. An executory contract still has material performance due. A signed purchase contract is usually executory before closing even though it has been executed in the sense of signed; use the exam's performance-status meaning.
What remedies should I practice?
Practice damages, liquidated damages, specific performance, rescission, cancellation, termination, forfeiture, and other remedies at the general exam level. Contract language, election rules, mitigation, equitable discretion, statute, and facts govern actual availability. Do not assume one remedy is automatic.
What practice score should I target in Contracts?
Aim for at least 85% on fresh mixed Contract sets and explain the timeline, status, party right, triggering fact, and strongest distractor for every uncertain answer. Because Contracts carries about 19 questions, repeated confusion here can dominate the national result.
Are these official PSI Contracts questions?
No. They are original practice examples aligned to the current PSI broker outline. The outline and primary Illinois, federal electronic-signature, mortgage-disclosure, and licensing sources were checked through August 1, 2026.
Primary sources
- PSI Illinois Candidate Information Booklet dated June 24, 2026
- Illinois General Assembly, Frauds Act
- Illinois General Assembly, Electronic Commerce Security Act and electronic-transactions provisions
- U.S. House Office of the Law Revision Counsel, Electronic Signatures in Global and National Commerce Act
- Consumer Financial Protection Bureau, current Closing Disclosure requirements
- Illinois General Assembly, Real Estate License Act of 2000
- Illinois Joint Committee on Administrative Rules, current Part 1450 real estate rules
The current official outline controls the tested scope. Statutes, regulations, and official agency materials control when a general study rule and a jurisdiction-specific rule differ.
Editorial status
Checked against primary sources
The Pass Illinois editorial team last checked this guide on August 1, 2026. Every practice question is an original study item, and the source links above let you verify the rules that support the lesson.