CHAPTER 4 Real Estate Contracts and Agency

Question 1

An express contract

Answer 1

is written or stated. Examples: a written sales contract, a verbal lease agreement, a written listing, a verbal buyer representation agreement

Question 2

An implied contract

Answer 2

An implied contract is by actions or evidence. This agreement is neither written nor discussed. It is
simply performed. Examples: taking a taxi, ordering from a menu, filling your gas tank and paying
at the pump with a credit card.

Question 3

A unilateral contract

Answer 3

binds only one party. An “If… then…” contract is unilateral.

Question 4

An option contract

Answer 4

t is the right to purchase property within a definite time period at a definite
price. There is no obligation to the purchaser to buy, but the seller is obligated to sell. Only one party
makes a promise - the seller. Only one party can be sued - the seller. The option fee goes directly
to the seller. To extend an option, the buyer would need to pay an added fee. When an option is
exercised, the unilateral contract becomes bilateral.

Question 5

a bilateral contract

Answer 5

A bilateral contract is an exchange of promises, which binds both parties. A sales contract is a
bilateral contract. Both parties make promises, and either or both can be sued.

Question 6

REQUIRED ELEMENTS OF A CONTRACT

Answer 6

1. Competent parties – sane, sober, consenting adults
2. Offer and acceptance (mutual agreement, or mutual consent) without qualifications
3. Legal purpose – also called legality of object
4. In writing - (Statute of Frauds)
5. Consideration - (Not earnest money) – something of value (payment or a promise) in
   exchange for what is being offered.
   Without #4 above, the contract would be valid but not enforceable