Basic Contract Law

Question 1

Consideration

Answer 1

Anything of value offered as incentive, such as money, or action

Question 2

Express contract

Answer 2

Parties have expressed all terms and conditions as agreed upon between then
Can be oral or written

Question 3

Implied contract

Answer 3

A contract implied through conduct and actions

Question 4

Bilateral contract

Answer 4

Based on mutual exchange or acts between parties. (Contract)

And

Question 5

Unilateral contract

Answer 5

One party makes a promise and the other responds with action to the promise but is not legally obligated to do so

(Keyword if)

Question 6

Executed contract

Answer 6

Contract has been full performed.

Question 7

Executory contracts

Answer 7

Contracts that have not been fully performed

Question 8

Valid contract

Answer 8

Contracts that are binding and enforceable

Question 9

Voidable contract

Answer 9

Failure to meet a legal requirement in negotiating the agreement

Question 10

Void contracts

Answer 10

Can be legally or automatically void. Absolutely unenforceable and has no legal force or effect

Question 11

Mutual assent

Answer 11

Parties must enter the contract voluntarily and agree to the terms and conditions

Question 12

Illusory offer

Answer 12

Offer is vague and acceptance will not form a valid contract

Question 13

Counteroffer

Answer 13

Rejection followed by a new offer

Question 14

Termination of offers

Answer 14

Expiration
Death or insanity 
Revocation 
Expiration of a reasonable time period
Failure to comply 
Expiration of power of attorney
Acceptance

Question 15

Earnest Money

Answer 15

The money the buyer deposits with the offer to purchase to show that the buyer earnest or sincere

Question 16

Contractual capacity

Answer 16

Must be legally competent to contract

Question 17

Mutual mistake

Answer 17

Mistake of fact or mistake of law
Does not excuse either party from performance
But can constitute legal grounds to nullify an agreement

Question 18

Duress

Answer 18

Fear or threat

Question 19

Time is of the essence

Answer 19

Creates a strict interpretation of the performance dates and does not allow flexibility

Question 20

Land contracts

Answer 20

(Installment contracts, conditional sale contracts)

Falls under statute of frauds

Question 21

Accord and satisfaction

Answer 21

Settlement agreement between the parties, often involving compromise

Question 22

Novation

Answer 22

Substitution of a new contract for an old one

Question 23

Assignment

Answer 23

Transfer of legal rights and obligations by one party to another
Usually assignable when it is not prohibited

Question 24

Parol evidence rule

Answer 24

Assumes the written words reflect the agreement and that anything orally agreed upon can be disregarded

Question 25

Compensatory damages

Answer 25

Compensation for any financial loss caused by the breach as may be awarded by a court

Question 26

Liquidated damages

Answer 26

If the amount for damages is agreed upon in the contract