Chapter 11 - Real Estate Contracts

Question 1

Assignment

Answer 1

A transfer of rights and duties under a contract.

Question 2

Bilateral contract

Answer 2

An agreement that obligates both parties to perform in accordance with the terms of the contract.

Question 3

Buyer brokerage agreement

Answer 3

An employment contract with a purchaser.

Question 4

Competent

Answer 4

A party to a contract who possesses the legal capacity to enter into a binding contract (i.e., no mental defects and of legal age to enter into contracts).

Question 5

Contract

Answer 5

An agreement between two or more competent parties to perform, or not perform, some legal act for a legal consideration.

Question 6

Enforceable contract

Answer 6

A legally binding contract that the law will recognize.

Question 7

Exclusive-agency listing

Answer 7

Employment contract given to one real estate broker, but the seller reserves the right to sell the property without paying a commission.

Question 8

Exclusive-right-of-sale listing

Answer 8

A listing given to one broker who is assured of a commission no matter who sells the property.

Question 9

Good consideration

Answer 9

A promise that cannot be measured in terms of money, such as love and affection.

Question 10

Liquidated damages

Answer 10

The amount of valuable consideration specified in an agreement as a penalty for default.

Question 11

Meeting of the minds

Answer 11

To reach an agreement on all terms in a contract.

Question 12

Mutual assent

Answer 12

The making and acceptance of an offer (agreement).

Question 13

Net listing

Answer 13

A listing created when a seller agrees to sell a property for a stated acceptable minimum amount.

Question 14

Novation

Answer 14

The substitution of a new party and/or new terms to an existing obligation.

Question 15

Open listing

Answer 15

An employment contract given to any number of brokers who work simultaneously to sell the owner’s property.

Question 16

Option contract

Answer 16

A unilateral contract to keep an offer to sell or lease real property open for a specified period of time.

Question 17

Parol contract

Answer 17

An oral agreement.

Question 18

Procuring cause

Answer 18

The chain of events that results in a sale.

Question 19

Statute of frauds

Answer 19

An act that requires that certain real estate instruments and contracts affecting title to real property be in writing in order to be enforceable.

Question 20

Statute of limitations

Answer 20

An act that designates the period of time during which the terms of a contract may be enforced.

Question 21

Unenforceable contract

Answer 21

A contract that would not stand up in a court of law because it does not meet the requirements of the statute of frauds or it runs beyond the statue of limitations.

Question 22

Unilateral contract

Answer 22

An agreement that obligates only one party to perform.

Question 23

Valid

Answer 23

Sufficient to be legally binding; enforceable.

Question 24

Valuable consideration

Answer 24

The money or a promise of something that can be measured in terms of money.

Question 25

Vendee

Answer 25

The buyer or purchaser of real property under an agreement of sale.

Question 26

Vendor

Answer 26

The seller of real property in an agreement of sale.

Question 27

Void

Answer 27

Contracts that do not meet all of the required elements of a valid contract have no legal effect.

Question 28

Voidable

Answer 28

A contract that allows one of the parties to avoid his or her contractual duties (e.g., when one party is a minor or a party is mentally incompetent).