Oregon 30-Hour Real Estate Law Practice Test

This scenario illustrates accepting partial performance: Martha made an offer to buy Drake's home, but only made a $5,000 earnest money deposit instead of the agreed $10,000. What does this situation represent?

1. Accepting partial performance

2. Coercion of contract terms

3. Failure of consideration

4. Negligent misrepresentation

The correct answer is: Accepting partial performance

In this scenario, accepting partial performance refers to the situation where one party performs part of their obligations under a contract while the other party recognizes that partial completion is an acceptable fulfillment of the terms. Here, Martha's offer to purchase Drake's home included an earnest money deposit, which is a common practice in real estate transactions to show good faith and commitment. Although she only paid $5,000 instead of the agreed $10,000, her actions indicate a willingness to move forward with the transaction, demonstrating partial performance of her contractual obligation. Drake, by possibly accepting this lower deposit, is acknowledging that the partial fulfillment can still hold value and allow the contract to move ahead. This acceptance of partial performance can lead to the continuation of negotiations or amendments to the contract to clarify expectations regarding the earnest money deposit. Thus, this situation aptly illustrates the principle of accepting partial performance in contract law, where the dominant issue is the manifestation of intention to fulfill the agreement, even if not completed in full.