Ch 18: Essential Characteristics of Contracts

Question 1

In contract terms, what is it called when two parties have pledged to perform or refrain from performing some act?

Answer 1

“Meeting of the minds”

Question 2

What are the features of an express contract?

Answer 2

A contract in which all the terms and covenants of the agreement have been clearly stated and agreed to by all parties, whether verbally or in writing.

Question 3

What is needed to establish the existence of an implied contract?

Answer 3

To establish the existence of an implied contract, it is necessary to show an unambiguous offer, unambiguous acceptance, mutual intent to be bound, and consideration. However, these components do not need to be in writing or oral; they could be the actions of the parties.

Question 4

Define bilateral and unilateral contracts.

Answer 4

A bilateral contract is one in which both parties promise to perform their respective parts of an agreement in exchange for performance by the other party.

In a unilateral contract, only one party promises to do something, provided the other party does something. The latter party is not obligated to perform any act, but the promising party must fulfill the promise if the other party chooses to perform.

Question 5

Explain executory contract and give one example.

Answer 5

An executory contract is one in which performance is yet to be completed. A sales contract prior to closing is an example of an executory contract.

Question 6

What is a void contract?

Answer 6

A void contract is an agreement that does not meet the tests for validity, and therefore is no contract at all. If a contract is void, neither party can enforce it.

Question 7

A voidable contract is one which initially appears to be valid, but is subject to what?

Answer 7

Cancellation by a party to the contract who is believed to have acted under some kind of disability

Question 8

What is it called when a contract is unenforceable due to needless delay or neglect in filing a claim even though the statute of limitations may not have expired?

Answer 8

Doctrine of Laches

Question 9

List the six elements required of a valid contract.

Answer 9

Competent parties, consideration, mutual agreement, lawful objective, in writing and signed by the parties, contain a legal description

Question 10

Define consideration.

Answer 10

Consideration is the exchange of promises offered by one party to another to do or not do something.

Question 11

If deliberate deception, fraud, or false information is present, the agreement is what?

Answer 11

Not enforceable

Question 12

What are the two commonly used legal descriptions in a contract?

Answer 12

Metes and bounds

Reference to a platted subdivision (lot, block, section, and subdivision name)

Question 13

A property address is not sufficient to transfer property. What must be included is the exact location and:

Answer 13

boundaries.

Question 14

When parties freely agree to the terms of the contract, exactly as the contract is written it is called:

Answer 14

mutual assent.

Question 15

Any last minute change to a contract that is done by hand should:

Answer 15

be initialed by all parties.

Question 16

If a contract is for legal purposes at the time it was executed, but becomes illegal prior to the performance of the contract, the contract:

Answer 16

becomes void.

Question 17

What type of law consists of both common law and statutory rules that govern the creation, interpretation, and enforcement of contracts?

Answer 17

Contract law

Question 18

What classic executory contract provides that the buyer gets title after making payments over a period of years?

Answer 18

A contract for deed

Question 19

What prevents mutual agreement to a contract because one party intentionally deceives another as to the nature and the consequences of a contract?

Answer 19

Fraud

Question 20

A completed and expired lease contract is:

Answer 20

an executed contract.

Question 21

A contract that has been fully performed and fulfilled where neither party bears any further obligation is called:

Answer 21

an executed contract.

Question 22

A unilateral mistake is:

Answer 22

an error made by one party.

Question 23

Contracts between two people or between a person and a business usually start with:

Answer 23

an agreement.

Question 24

In the United States every contract for the sale of goods that exceeds what amount must be written to be legally enforceable?

Answer 24

$500

Question 25

What in Pennsylvania requires that all agreements affecting title to or interest in real estate be in writing and signed by the parties?

Answer 25

The Statute of Frauds

Question 26

A contract in which both parties promise to perform their respective parts of an agreement in exchange for performance by the other party is called:

Answer 26

To establish the existence of an implied contract, it is necessary to show an unambiguous offer, unambiguous acceptance, mutual intent to be bound, and: