Chapter 8: Basic Contract Law Flashcards
refers to a transfer of rights or duties but not the liabilities under a contract to a third party. Rights or interest being transferred could be in a bond, a mortgage, a lease, or another instrument
assignment
A form of selling property where oral bids are taken and the property is sold to the highest bidder
auction
both parties promise to do or refrain from doing something; one promise is exchanged for another
bilateral contract
a violation, without legal excuse, of any of the terms or conditions of a contract, as when a seller breches a sales contract by not delivering title to the buyer under the conditions stated in the agreement.
breach of contract
Money damages awarded to the injured party to compensate them for the breach of contract, but not to punish the breaching party
compensatory damages
special damages that might be obtained if the damages upon breach were reasonably foreseable to the breaching party at the time of making the contract. Also allows the injured party to sue for lost profits.
consequential damages
(1) that received by the grantor in exchange for a deed. (2) Something of value that induces a person to enter into a legally enforceable contract
consideration
a legally enforceable promise or set of promises between legally competent parties, supported by legal consideration, to do (or refraid from doing) a legal act that must be perfomed and for wwhich the law provides a remedy if a breach of promise occurs
contract
any attempt by the offeree to change any of the terms proposed by the offeror
counteroffer
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed. Considered liquidated damages in the event the buyer breaches the contract.
earnest money deposit
one in which all parties have fulfilled their promises and, therefore, fully performed the contract, such as a sales contract that has closed.
executed contract
exists when something remains to be done by one or both parties
executory contract
the parties state the terms and show their intentions in words to that effect. May be oral or written
express contract
the agreement of the parties is demonstrated by their actions or conduct
implied contract
The purpose of a legally enforceable contract cannot be for illegal actions or acts against public policy
legality of object
People who are recognized by law as being able to contract with others’ those of legal age and sound mind; a requirement of a legally enforceable contract
legally competent parties
the amount of money that will compensate the injured party for breach, which the parties agree to at the time they enter into the contract.
liquidated damages Example: earneset money deposit
mutual assent occurs when this happens
“meeting of the minds”
A deliberate agreement between parties; offer and acceptance; “meeting of the minds.” A requirement of a legally enforceable contract.
mutual assent
Substituting a new contract for an old one or substituting new parties to an existing contract
novation (nova means new)
The promise of one party to act or perform in a certain manner if the other party agrees to act or perform as requested; shows an intention to enter into a contract
offer
two essential components of a valid contract
offer and acceptance
A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be varied or contradicted by prior or contemporaneous oral or written negotiations
parol evidence rule
If misrepresentation, fraud, mistake of fact, undue influence or duress are absent in contract formation, good contract is formed
reality of consent
the contract is declared invalid and both parties return to the position they were in before they entered into the contract. May be appropriate when facts were misrepresented or one party yentered the contract under duress
rescission
A legal action to compel a party to carry out the terms of a contract. The injured party may file a court action to force the other party to perform the contract as agreed.
specific performance
A state law that requires that certain instruments that convey interest in real estate be in writing to be legally enforceable, such as deeds, real estate sales contracts, and certain leases
statute of frauds
The law pertaining to the period of time within which certain actions must be brought to court or be lost.
statute of limitations
A phrase in a ontract that requires the performance of a certain act no later than a stated time or the noncompliant party is in breach and the contract may be voidable by the opposite party
time is of the essence
has all the elements of a valid contract; however, neither party can sue the other to force performance. Ex: oral agreement
unenforceable contract
one party makes a promise to induce a second party to do something. Second party is not legally obligated to act
unilateral contract
compleis with all the essential elements of a contract. Binding and enforceable on both parties
valid contract
one that seems, on the surface, to be valid but may be rescinded, or disaffirmed, by one of the parties, based on some legal principle
voidable contract
one that has no legal force or effect. It is unenforceable in a court of law because it does not meet the essential elements of a contract. May be fully executed unless one of the parties disaffirms it
void contract
