Check Your Understanding Answers
- A contract terminates when fully executed by the parties. This is called what?
Performance
- Parties to a contract can agree to terminate, or renounce, the contract. What is the term for this action?
Mutual Agreement
- Explain assignment of a contract.
A real estate contract that is not a personal contract for services can be assigned to another party unless the terms of the agreement specifically prohibit assignment. Sales contracts are assignable because they involve the purchase of real property rather than a personal service.
- If an assignor does not receive a novation, what does this mean in regards to his or her obligations to a contract?
Unless the assignor receives a complete release from liability (a novation), the assignor would be secondarily liable if the assignee did not perform according to the contract terms.
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