Chapter 12- Contract Law Flashcards
What is an express contract?
exists when the parties state the terms and show their intentions in words. Can be oral or written
What is an implied contract?
the agreement of the parties is demonstrated by their acts and conduct.
What are the two ways a contract can be enforable?
- enforable between parties: this is an everyday contract that is usually between friends and family. This type of contract depends on the good will of the parties to perform. If one party does not abide by the contract then it is not enforable in court.
- Enforable in Court: only written contracts can be enforable in court.
In IL, does a contract have to be in writing to be enforable?
YES!
What is the Illinois Statue of Frauds?
requires that any contracts to sell land or lease must be for more than one year, to be in writing to be enforable in court.
What is the Illinois Real Estate License Act of 2000?
indicates that contracts, for instance, between employment agreements b/t sponsering broker and their licensees be in writing.
what is a bilateral contract?
It is a contract between 2 parties where both parties have to perform an action.
what is a unilateral contract?
It is a one-sided contract. This means one party makes a promise to induce a second party to do something. The second party is not legally obligated to act. However if the second party does comply, the first party is then obligated to keep the promise. An example is an option contract.
What is an option contract?
The right to purchase property within a definite timeframe at a specified price. No obligation to the purchase exists, but the seller must sell if the option holder exercises right to purchase.
Illinois case law supports the proposition that exclusive brokerage contracts are unilateral, true or false?
True. If exclusive brokerage constracts were bilateral contracts, then the listing broker would be in breach of the contract if he failed to produce a buyer.
What is an executed contract?
Is when all parties have fullfilled their promises, in other words, the contract has been performed. This occurs after closing.
Becareful, this word can be confused with execute which refers to the act of signing a contract.
What is an executory contract?
Exisits when one or both parties still have an act to perform. A sales contract is an executory contract from the time it is signed until closing.
What are the 4 elements of a contract?
COALL
- Consideration
- Offer
- Acceptance
- Legalitis (legal purpose and legally competant)
What is the term used to describe the person who makes the offer?
offeror
What is the term used to describe the person who accepts the offer?
offeree
What is another word for offer and acceptance?
mutal assent
Any offer can be withdrawn at anytime before it is accepted, even if the person making the offer or counteroffer agreed to keep the offer open for a set period of time, true or false?
True
What is consideration?
It is something of legal value offered by one party and accepted by another party as an inducement to enter a contract.
What are the 2 types of consideration?
- valuable (money, tangible things)
2. good (love and affection)
What is reality of consent?
States that each party must be able to make a prudent and knowledable decsion without undue influence.
A mistake, misrepresentation, fraud, undue influence, or duress deprives a person of that ability.
Under the concept of reality of consent, if someone finds that one of the circumstances of undue influence exists, is the contract considered void or voidable by the injured party.
voidable
What is the meaning of legal purpose when speaking about the elements of a contract?
It means that the promises stated within the contract must be legal according to state law. An illegal contract would be considered to not be a vaild contract.
In regards to the elements of a contract, what is the meaning of legally competant parties?
Must have enough mental compacity to understand the nature or consequences of their actions. Must be over 18
What is a valid contract?
It meets all the essential elements of a contract that makes it legally sufficient or enforcable.
What is a void contract?
it has not legal force of effect because it lacks some or all of the essential elements.
What is a voidable contract?
Signed under distress, intoxicated, fraud, underage, mentally ill DURING the mental illness.
Ex: a wife making a husband buy real estate by threatening to leave him
Is a oral contract enforable?
NO
Cavent Emptor means…
buyer be aware
cavent venditor means….
seller beware
In regards to contracts, what is time of essence?
It means that the contract must be performed within the time limit specified. A party who fails to perform on time is liable for breach of contract.
In Illinois, is a deed or contract considered vaild and enforcable if it excuted on a Sunday or legal holiday?
Yes. However, when the last day on which the deed or contract must be executed is a holiday or Sunday, the deed or contract may be executed on the next regular business day.
what is Assignment?
The transfer of rights or duties under a contract. Rights may be assigned to a 3rd party. Obligations may be assigned or delegated
What is a breach of contract?
It’s a violation of any of the terms or conditions of a contract without legal excuse.
What is suit of specific performance?
A legal action brought by either a buyer or a seller to ENFORCE perfoamce of the terms of a contract.
What is a liquidated damages clause?
when the seller gets to keep the earnest money and any other payments received from the buyer.
In Illinois, what is the statue of limitations for oral contracts?
5 years
In Illinois, what is the statue of limitations for written contracts?
10 years
What is the Quinlan & Tyson Decision?
It placed limitations on real estate licensees in drafting a contract of sale. The court ruled that:
- Licensees can only use printed form contracts
- Licensees are only allowed to fill in blanks on printed form. Where no info is required, they must write NA or line through the unused blank.
- Lincensees are only allowed to line out wording which is not applicable to the contract.
What must a buyer and seller do if changes are made to a contract and both parties agree to the changes?
They must inital it the changes. Agents ARE REQUIRED TO PROVIDE THE ORIGINAL CONTRACT WITHIN 24 HOURS OF THE TIME OF SIGNING.
Does Illinois requires for all agensts to be listed, commisions listed and how the commision will be split to be included in a sales contract?
Yes, that is Illinois law.
When must earnest money be deposited?
THE NEXT BUSINESS DAY
what is another word for earnest money?
good fath deposit
what is earnest money?
evidence of the buyer’s intention to carry out the terms of the contract in good faith
what is commingling?
mixing business and personal money
what is conversion?
using money from the business account to pay personal expenses
what is equitable title?
This is the buyer’s interest in the land. The legal title is transfers only on delivery and acceptance of a deed.
What is the Uniform Vendor and Purchaser Risk Act which is in Illinois?
It states that the seller is responsible for any loss or destruction of the property before the title passes or the buyer takes possession.
What is an amendment?
a change to a contract
what is an amended contract?
when words are added or deleted from a contracts.
what is an addendum?
a provision that is added to an existing contract without altering the content of the original. Essentially, it’s a new contract.
What is an option contract?
The optionor (owner) gives the optionee (buyer) the right to buy or lease at a fixed price within a fixed timeframe. An option contract is a unilateral contract. The optionee has the RIGHT to buy. The optionor is OBLIGATED to sell if the optionee decides to exercise his right.
what is a land contract?
aka installment contract or contract for deed
This takes place when the retains legal title but while the buyer hold equitable title. This means that the buyer will pay the seller a down payment and make payments to the seller until the house is paid off and the buyer also given possession rights.
