Chapter 9 Flashcards
anything of value offered an an inducement to contract (money, action, or forebearance)
Consideration
parties of the contract have expressed all the terms and conditions as agreed upon between them. Can be written or oral
express contract
a contract that is implied from the conduct and actions of the parties
implied contract
a contract based on mutual exchange of promises or acts between two parties (both make promises)
bilateral contract
one party makes a promise to the other and the second party returns an action in response to the promise, but not legally bound
unilateral contract
a contract that has been fully performed by the parties
executed contract
contracts that have not been fully performed (pending)
executory contract
a binding and enforceable contract
Valid contract
a contract that results from failure to meet some legal requirement
Voidable contract
a contract that is absolutely unenforceable and has no legal force or effect (issues with the contract itself, not the parties)
Void contract
What are the essential elements of a Valid Contract?
- Mutual agreement of parties
- Consideration (exchange something of value)
- Mentally Competent Parties
- Legal Promises (promise to perform a legal act)
the person making an offer
Offeror
The person the offer is being made to
Offeree
when an offer is vague and an acceptance will not result in the creation of a calid contract
illusory offer
a rejection coupled with a new offer
counteroffer
In what ways can an offer be terminated?
- By rejection or counteroffer
- Within a prescribed time (specified time limit, or a “reasonable” period of time after the offer is made & before acceptance)
- By revocation prior to acceptance
- Be death or insanity prior to acceptance
- Acceptance by Offeree
- By expiration of a Power of Attorney
anything of value
consideration
money that the buyer deposits with the offer to purchase to show that they buyer is earnest, or sincere, in the intent to purchase the property
earnest money
legally competent
contractual capacity
contracts must have legal purpose
legal objective
requires all real estate documents to be in writing
Statute of Frauds
states that a written agreement takes priority over a verbal agreement
Parol Evidence Rule
physical threat to someone
duress
emotional threat to someone
undue influence
seller in an auction reserves the right to reject all incoming bids
With Reserve
the seller holds no reservations and has indicated her acceptance of whatever bids are obtained
Without Reserve/Absolute
Who can accept an offer for a seller: A broker or an auctioneer?
An auctioneer
allows contracts to be created by electronic means and recognizes that an electronic signature is binding
Uniform Electronic Transaction Act (UETA)
What are the four ways a CONTRACT can be terminated?
- Agreement of parties
- Full performance
- Impossibility of performance
- Operation of law
each party in a transaction releases the other from performance
release
settlement agreement between the parties, often in the form of some compromise
accord and satisfaction
replacing a prior contract with a new contract
novation
when all terms of the contract have been fully completed by all parties
full performance
describes the manner in which the rights or liabilities of parties may be changed by the application of law without the act or cooperation of the parties affected
operation of law
failure, without legal excuse, to perform any promise that form the whole or part of a contract
breach of contract
the transfer of legal rights and obligations by one party to another
assignment
a term that means contractual terms and dates must be strictly adhered to
time is of the essence
What are five ways a contract can be remedied?
- Compensation
- Consequential
- Recission
- Liquidated Damages
- Specific Performance
compensation for any financial loss caused by the breach as may be awarded by the court
compensatory damages
amount of money agreed upon in the contract for damages
liquidated damages
to make a party do what they said they would do, specifically a seller in breach
specific performance
