Chapter 7 - Contract Law

Question 1

Expressed Contract

Answer 1

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

Question 2

Implied Contract

Answer 2

Created by action of the parties indicating that they intend to create a contract (taking a taxi or eating at a resturant)

Question 3

Bilateral Contract

Answer 3

Promise for a promise
- Typical real estate sale (I will pay, you will give)

Question 4

Unilateral Contract

Answer 4

When a promise is exchanged for performance (Reward for a lost pet)
- I will do this IF you do that

Question 5

Forbear

Answer 5

Not to act

Question 6

Valid Contract Requirements (5)

Answer 6

1) Legally competent parties
2) Mutual agreement
3) Lawful Objective
4) Consideration/Cause
5) Contract in writing when required

Question 7

Voidable Contract

Answer 7

Binds one party but not the other

Question 8

Unenforceable Contract

Answer 8

May have been valid, but its enforcement is not barred by the statute of limitations or doctrine of laches (unreasonable delays)

Question 9

Power of Attorney

Answer 9

Document by which ne person authorized another to act on his behalf

Question 10

Attorney-in-fact

Answer 10

Person holding power of attorney

Question 11

Fraud

Answer 11

An act intended to deceive for the purpose of inducing another to give up something of value

Question 12

Innocent Misrepresenation

Answer 12

The party providing incorrect information is not doing so to deceive another for the purpose of reaching an agreement

Question 13

Mistake

Answer 13

Arises from ambiguity in negotiations and mistake of material fact

Question 14

Consideration

Answer 14

An act of promise given in exchange for something

Question 15

Good Consideration

Answer 15

Consideration without monetary value such as love & affection

Question 16

Parol Evidence Rule

Answer 16

Permits oral evidence to complete an otherwise incomplete or ambiguous written contract - not really used

Question 17

Executory

Answer 17

Process of being performed

Question 18

Novation

Answer 18

The substitution of a new contract between the same or new parties

Question 19

Breach of Contract Options

Answer 19

• 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)

Question 20

Who is a unilateral contract is enforceable against?

Answer 20

The offeror

Question 21

A contract which binds one party but not the other is

Answer 21

Voidable, by party who is not bound by it

Question 22

A contract which is legally insufficient is classified as

Answer 22

Void

Question 23

a person who executes a contract for a corporation must derive that authority from

Answer 23

the corporate board of directors

Question 24

Mutual agreement is missing when a contract is made

Answer 24

Under duress, undue influence or under menace

Question 25

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

Answer 25

Undue influence

Question 26

A contract based on fraud is

Answer 26

voidable by the injured party

Question 27

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,

Answer 27

the buyer can rescind the sales contract

Question 28

Uniform Vendor and Purchaser Risk Act

Answer 28

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