Chapter 12 - Real Estate Contracts Flashcards
A _______ is a voluntary promise between two competent parties to PERFORM (or not perform) some legal act in exchange for consideration.
A CONTRACT
A BILATERAL contract must have?
TWO promises. Bi = two
Both parties promise to do something; one promise is given in exchange for another.
An exclusive right to sell listing contract is a bilateral contract.
a UNILATERAL contract has?
ONE promise. Uni = one
It’s a one sided agreement. One party makes a promise in order to entice a second party to do something.
A contract in which all parties have fulfilled their promises ; the contract has been performed is called an:
EXECUTED contract.
The term executed is also used to refer to the signing of a contract.
An EXECUTORY CONTRACT exists when one or both parties STILL have an act to perform. It is a…….
contingency. A sales contract is an executory contract from the time it is signed until closing; ownership has not yet changed hands, and the seller has not received the sales price. At closing…the sales contract is executed.
The ELEMENTS OF A CONTRACT are:
- Offer and Acceptance
- Consideration
- Legally competent parties
- Consent
- Legal purpose
The OFFER AND ACCEPTANCE ‘element of a contract’ means what?
The sales contract sets out the offer by the buyer that is accepted. The person who makes the offer is the OFFER (giver) The person to whom an offer is made is the OFFEREE (receiver). This requirement is also called mutual assent. (a meeting of the minds).
The CONSIDERATION in an ‘element of a contract’ Is?
Something of legal value offered by one party and accepted by another as an inducement to perform or to refrain from performing some act. (money or monetary value + a promise)
The CONSENT in an ‘element of a contract’ is?
Entered into by consent as a free and voluntary act of each party.
The LEGAL PURPOSE in an ‘element of a contract’ is?
The contract must have a LEGAL reason for existence.
The LEGALLY COMPETENT PARTIES in an ‘element of a contract’ is?
All parties to the contract must have legal capacity, meaning they must be of legal age and have enough mental capacity to understand the nature or consequences of their actions in the contract.
A contract may be described as?
VALID - has all legal elements
VOID - lacks one or more elements and has no legal force or effect
VOIDABLE - has all legal elements on its face, but it may be rescinded or disaffirmed; (1 party is ABLE to void the contract) or
UNENFORCEABLE - appears to have all legal elements but cannot be enforced in court.
Many contracts call for a specific time by which the agreed acts must be completely performed. Some contracts provide that ‘TIME IS OF THE ESSENCE’ which means?
That each of the elements of the contract MUST be performed within the specified time.
‘Get the job done as quickly as possible!’.
NOVATION means what?
Substitution of a new contract for an existing contract. Substituting a new obligation for an old one or substituting new parties to an existing obligation.
If you assume someone’s loan this is a form of novation
If the seller breaches a real estate sales contract, the buyer may sue for?
SPECIFIC PERFORMANCE..unless the contract specifically states otherwise. In a suit for SPECIFIC PERFORMANCE (or damages), the buyer asks the court to force the seller to go through with the sale and transfer the property as previously agreed. The buyer may choose to sue for damages, in which case the seller is asked to pay for any costs and hardships suffered by the buyer as a result of the seller’s breach.
