California Real Estate Practice Exam

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If owner A hires someone to burn down his building for insurance money, and they agree on all terms including payment, the contract would be considered:

  1. Valid

  2. Voidable

  3. Unenforceable

  4. Void

The correct answer is: Void

This contract would be considered void because the purpose of the contract is illegal and therefore against public policy. While owner A and the hired person may have come to an agreement and signed a contract, the contract would not be enforceable in court because it is a contract that promotes illegal activity. Additionally, void contracts are considered to have never existed, which means that no legal rights or obligations can arise from them. This makes the contract null and void and any terms agreed upon between owner A and the hired person would not be legally binding. Choice A, valid, would not apply in this situation as the contract itself is considered illegal. Choice B, voidable, typically refers to a contract that can be cancelled by one or both parties due to a legal deficiency or lack of capacity of one of the parties. Choice C, unenforceable, usually applies to a contract that may be validly formed,

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