Chapter 20 - Contract Law Flashcards
What condition precedent is most common in real estate transactions?
allows the Borrower to cancel the contract if he or she can not obtain mortgage financing
Under the doctrine of privity of contract, who can enforce the terms and conditions of a contract?
Only direct parties involved
Discuss the differences between duress and undue influence
Duress - a threat or act that causes someone to act against their will (moreso physical force)
Undue Influence - pressure or act of persuasion that causes someone to act against their will
If misrepresentation exists, what option is available?
The contract may be rescinded
A contract of employment between a Mortgage Agent and a Mortgage Brokerage contains a clause that states, “This contract may be terminated by either party by providing thirty days’ notice to the other party”. Of what is this an example?
Discharge by right
Breach of contract: Remedy = Damages
Explain what this means
Damages = award of money by the court given to the innocent party
Breach of contract: Remedy = Specific Performance
Explain what this means
The defendant is required to perform a specific task
Example
Janet has entered into a valid agreement of purchase and sale to purchase a home from David.
David decides not to sell Janet the home and instead enters into another agreement of purchase
and sale with Jamar. Janet can sue David for specific performance requiring him to complete
the sale of the home to Janet.
Define Quantum Meruit
Explain what this means
Meaning “as much as is deserved”
Is an amount determined by a court. The contract must stipulate that an amount of consideration will be paid but the contract doesn’t state the exact amount
Define Injunction
An injunction is a court order that prohibits a party from doing something or acting in a certain
manner
Example
Janet has entered into a valid agreement of purchase and sale to purchase a home from David.
David decides not to sell Janet the home and instead enters into another agreement of purchase
and sale with another buyer named Gordon. Before David can sell the property to Janet, she
obtains an injunction with prevents David from completing the sale.
Define Rescission
Explain what this means
A court order designed to put the parties of a contract in the position they would have been had the contract never been made
Example
Dave, a minor, has entered into a contract to purchase a motorcycle from Adam by giving Adam
a down payment and providing monthly payments. Unfortunately, Dave cannot afford these
monthly payments and defaults on his obligations under the contract. Since he is a minor, he
490 Chapter 20: Contract Law
can void the contract, and have it rescinded. In doing so Dave must return the motorcycle to
Adam and Adam must return the payment he has received to Dave. If the motorcycle has been
substantially diminished in value due to damage caused by Dave, the contract will not be
rescinded. However, damages would be payable to restore the parties to their original
positions
Contractual Defects. Define Misrepresentation
If there is a false statement within the contract
Contractual Defects. Define Duress
A threat or act that causes someone to act against their will
Contractual Defects. Define Undue Influence
A pressure or act of persuasion that changes someone’s judgment
Contractual Defects. Give an example of Unconscionable Acts
Taking advantage of an intellectually challenged person
Contractual Defects. Define Mistake
When a party within the contract realizes there is a misunderstanding about a fundamental term in contract
