CHAPTER 7: CONTRACTS Flashcards
___ ____- a contract in which one party promises to do something if the other party performs a certain act,but the other party does not promise to perform it.
unilateral
Example of a unilateral contract.
-___ listing
open listing
_____ _____- a contract between two or more parties in which each party promises to do something.
bi lateral
Examples of bilateral contracts
- ____ right to sell contract
- _____ agency contract
- ______ sale contract
- ____
- ____ ____ agreement
exclusive
exclusive
purchase sales contract
lease
independent contractor
____ ____- a contract that has been put into words, either spoken or written.
express contracts
___ ____- an agreement that has not been put into words, but is implied by the actions of the parties
implied contract
sitting down and ordering food
According to the ___ of ____, most real estate contracts must be in writing
Statute of Frauds
Real estate contracts that must be in writing
- ____ contracts
- ___ ___ contracts
- ___ ___ leases
- ___ ___ agreements
agency
purchase sales
long term
independent contractor
____ agreement creates an agency relationship between an agent and a seller and authorizes
an agent to sell a property on the seller’s behalf. The listing agreement determines how—and
whether—a real estate agent is paid.
listing
___ ___- is a written or oral agreement that can be imposed in a court of law
enforceable contract
___ ____- s a written or oral agreement that will not be enforced by courts. There are many different reasons that a court may not enforce a contract. Contracts may be unenforceable because of their subject matter, because one party to the agreement unfairly took advantage of the other party, or because there is not enough proof of the agreement.
unenforceable contract
___- contract is legally unenforceable, starting from the time it was created.
void
____- when one or both parties were not legally capable of entering into the agreement, such as when one party is a minor.
voidable
Essential Elements of a contract
- ___ and ___- the parties must have a meeting of the minds. Offer must be clean in character, accurately describe the property, and have an exact price.
offer and acceptance
Essential Elements of a contract
____- anything given or promised by a party to induce another to enter into a contract. MONEY is commonly used as consideration in a real estate contract.
Other types of consideration:
personal services
consideration
Essential Elements of a contract
___ ___- all parties must have the legal capacity to enter into a contract
- other competent parties include:
- persons acting on behalf of a corporation
- power of attorney
- fiduciary given the authority to contract
- emancipated minor
legal capacity
18+ and sound mind/mental capacity
Essential Elements of a contract
____ ____- the contract must have lawful object
legal purpose
____ contract- A contract in which both parties have completely performed their
contractual obligations
Executed Contract
___ contract- A contract in which one or both parties have not yet completed
performance of their obligations
Executory Contract
____ contract- To have no force or effect; that which is unenforceable
void
___- That which is capable of being adjudged void, but is not void unless action is
taken to make it so. No legal force of effect
Voidable
___ contract- a contract in which parties may be legally required to perform.
enforceable
____ contract- a contract that appears to meet the requirements for validity but would not be enforceable in court.
example: an oral contract used to purchase property bc they have to be in writing according to the Statute of Frauds
unenforceable
___ is of the ___- A condition of a contract expressing the essential nature of
performance of the contract by a party in a specified period of time.
Time is of the Essence
____ performance by both parties is the best way to terminate a contract. If both parties fully
perform, then each party gains the benefit of the bargain they made, and the parties don’t need
a court to enforce the contract. Most contracts terminate just this way—with both parties fully
performing and happily going their respective ways.
Full performance
A court also has authority to terminate a contract when a party commits a ___. A breach occurs
when one party—or both parties—fails to perform as the contract requires.
breach
____ is of the ___ clause- clause requires
the parties to perform their obligations by a specified time. If the parties haven’t performed by the
date set in the clause, they are in breach of contract.
a “time is of the essence” caluse
____- A transfer to another of any property in possession or in action, or of any
estate or right therein. A transfer by a person of that person’s rights under a contract.
assignment
assignor and assignee
___- The substitution or exchange of a new obligation or contract for an old one by
the mutual agreement of the parties.
Novation
Unlike assignment, however, novation requires both parties to agree to it. Novation usually results
in a completely new contract, under the same terms, but with different parties. Unlike assignment,
novation usually releases one of the original parties from their obligations.
Novation
A prime example of novation in real estate is the assumption of an existing mortgage by a new
buyer. When the lender agrees to it, the parties execute a novation at closing that substitutes the
new buyer for the old debtor and imposes all the existing obligations of the original mortgage loan
on the new debtor. The novation creates a new contract between the lender and the buyer, and,
unlike assignment, the seller leaves the transaction free of obligation.
Novation
DISCHARGE OF CONTRACTS
____ OF THE PARTIES - the parties to a contract can simply agree to terminate the contract.
agreement of the parties
DISCHARGE OF CONTRACTS
____ performance - an executed contract occurs when all parties fully perform the terms of the contract.
example - when a property closing is completed, and the funds and title have been transferred, the sales contract between the buyer and the seller is considered fully performed or executed.
full
______ OF performance- impossibility of performance is often used as a defense for breach of contract. It occurs when it becomes impossible for one or more parties to perform their duties of the contract.
The following are considered through grounds for impossibility of performance:
- one or more parties gets injured or passes away
- the property gets destroyed
- the government passes a law that makes the contract performance illegal.
Impossibility of performance
DISCHARGE OF CONTRACTS
_____ OF LAW- operation of law describes how the rights and liabilities of the parties may be changed by the application of law.
example: an individual files for bankruptcy. any debt obligations the individual possesses through existing contracts may be terminated.
operation of law
