Humber/Ontario Real Estate Course 1 Exam Practice

When addressing contractual obligations, which of the following statements is true?

1. Only those named in the contract can enforce its terms.

2. Any interested party can enforce the contract.

3. Contracts can be enforced by community associations.

4. Verbal agreements hold no power in enforcement.

5. State-appointed arbitrators have ultimate enforcement authority.

6. Witnesses to the contract can enforce its terms.

The correct answer is: Only those named in the contract can enforce its terms.

In real estate, contractual obligations are typically only enforceable by those who are specifically named in the contract. This is in line with the principle of privity of contract, which states that only parties that have entered into a contract can enforce its terms against each other. Therefore, option A is correct. Options B, C, and F are incorrect because in general, any interested party, community associations, or witnesses to a contract do not have the authority to enforce the terms of a contract unless they are specifically named as parties to the contract. Option D is incorrect because verbal agreements can hold power in enforcement under certain circumstances, although written contracts are generally preferred because they provide clearer evidence of the agreed-upon terms. Option E is incorrect because state-appointed arbitrators do not typically have ultimate enforcement authority over contracts unless the parties have agreed to arbitration as a method of dispute resolution.