Chapter 7 - Contract Law Flashcards
Expressed Contract
Occurs when parties to the contract declare their intensions either orally or in writing.
- Can be lease, rental or a contract to purchase real estate
Implied Contract
Created by action of the parties indicating that they intend to create a contract (taking a taxi or eating at a resturant)
Bilateral Contract
Promise for a promise
- Typical real estate sale (I will pay, you will give)
Unilateral Contract
When a promise is exchanged for performance (Reward for a lost pet)
- I will do this IF you do that
Forbear
Not to act
Valid Contract Requirements (5)
1) Legally competent parties
2) Mutual agreement
3) Lawful Objective
4) Consideration/Cause
5) Contract in writing when required
Voidable Contract
Binds one party but not the other
Unenforceable Contract
May have been valid, but its enforcement is not barred by the statute of limitations or doctrine of laches (unreasonable delays)
Power of Attorney
Document by which ne person authorized another to act on his behalf
Attorney-in-fact
Person holding power of attorney
Fraud
An act intended to deceive for the purpose of inducing another to give up something of value
Innocent Misrepresenation
The party providing incorrect information is not doing so to deceive another for the purpose of reaching an agreement
Mistake
Arises from ambiguity in negotiations and mistake of material fact
Consideration
An act of promise given in exchange for something
Good Consideration
Consideration without monetary value such as love & affection
Parol Evidence Rule
Permits oral evidence to complete an otherwise incomplete or ambiguous written contract - not really used
Executory
Process of being performed
Novation
The substitution of a new contract between the same or new parties
Breach of Contract Options
- Accept partial performance (Not a lot at stake)
- Unilateral rescind (If you don’t do this thing, I won’t do that)
- Sue for money damages (If damages can be reasonably expressed in terms of money
- Sue for specific performance (Force the other party to complete the remaining contact per terms of agreement)
- Accept liquidated damages (Amount of money specified in contract as compensation to be paid if contract is not satisfactorily completed)
- Mutual rescission (Must be in writing - both parties agree to cancel contract)
Who is a unilateral contract is enforceable against?
The offeror
A contract which binds one party but not the other is
Voidable, by party who is not bound by it
A contract which is legally insufficient is classified as
Void
a person who executes a contract for a corporation must derive that authority from
the corporate board of directors
Mutual agreement is missing when a contract is made
Under duress, undue influence or under menace
A real estate agent who takes advantage of an elderly property owner’s ignorance of the value of this own property in order to induce him to sell below market value would have committed
Undue influence
A contract based on fraud is
voidable by the injured party
Broker Neal listed a home for sale wherein the seller stated that the existing loan was assumable by the buyer. Neal told this to the prospective buyers, and in time a sales contract was executed. However, the lender refused to allow the assumption to take place. As a result of this,
the buyer can rescind the sales contract
Uniform Vendor and Purchaser Risk Act
The risk of loss to the property from casualty remains with the seller until title passes to the purchaser OR possession is given to the purchaser, whichever occurs first
