Chapter 11 Contracts Flashcards
Express contracts
Contracts that are expressed either in writing or orally
Implied Contract
Agreement of parties are demonstrated by their acts
Bilateral Contract
Both parties promise to do something
Unilateral Contract
One party make a promise to do something if the other party does something. The second party is not legally obliged but if they do that thing, the first party is legally obliged to to what they promised
Executed contract
When both parties have fulfilled their obligations
Executory Contract
When only one or neither parties have fulfilled their contract
Elements of a contract
- Offer and Acceptance
- consideration
- legally competent parties
- Consent
- Legal purpose
Validity of Contract
- valid
- void
- voidable
- unenforceable
Contract is Valid when
It has the all of the elements to make it enforceable
Contract is void when
Lacks one or more elements has no legal force or effect
Contract is voidable when
Seems to have all legal elements but may be rescinded by one or both parties
Contract is Unenforceable when
Hs the legal elements and is enforceable only between the parties
Assignment
Promises may be assigned to a third party but first party is still responsible for them
Novation
Substitution of a we contract
Reasons for terminating a contract
- Partial Performance
- Substandard Performance
- Impossibility of Performance
- operation of law
- recession (a cancelation of contact that puts parties back where they were before it started
Contracts used in real estate
- listing and buying agency agreements
- Real estate sales contracts
- option agreements
- escrow agreements
- Leases
- land contracts or contracts for deed
Acceptance
When seller agrees to offer and buyer has been notified of the acceptance
Equitable title
The interest a buyer has in the property after contract has been executed and before the title has been transfers
Liquidated damages
A certain amount of money that is agreed upon by both parties in case contract is breached. Non breaching party is entitled to money.
Contingencies
Conditions that must be satisfied before a sales contract is enforceable.
- Actions Necessary
- Time frame
- Who is responsible
Addendum
Additions to contract
Amendments
Changes in contract
Options
A contract with an option to by within a specified time
Land contract
Aka Contract for deed Bond for title Installment contract Land sales contract Articles of agreement for warranty deed
Seller remains owner until buyers pays it off
Binder
A shorter document used in place of a sales contract until sales contract has been drawn up.
Earnest money deposits
A deposit giving to the seller by the buyer.
Customary but not required.
Money is but into the brokers escrow account
Escrow
Earnest money given to be held by broker.
