Chapter 9 - Contracts

Question 1

What is a contract?

Answer 1

may be defined as a voluntary agreement between two or more legally competent parties, supported by consideration

Question 2

What are damages?

Answer 2

A solid, clearly defined contract insures the performance of the parties to their agreements by requiring that they either perform, or pay all loss or damage caused by their non-performance

Question 3

What is the Statute of Frauds?

Answer 3

governs most real estate contracts. The statue was created to prevent perjury, forgery and dishonest conduct on the part of the unscrupulous persons proving the existence and terms of contractual obligations

Question 4

What is a unilateral contract?

Answer 4

is one in which a promise is made by one party to induce some act or performance on the part of the other

Question 5

What is a bilateral contract?

Answer 5

is one which both parties mutually exchange the promises, and the contract becomes binding at the time of the agreement

Question 6

What is a valid contract?

Answer 6

is one that satisfies all the legal requirements of a contract; one that has all the essential elements required by law

Question 7

What is a void contract?

Answer 7

is a contract that has no effect legally, with the parties in the same position they would have been if no contract existed at all

Question 8

What is a voidable contract?

Answer 8

is one that may be enforced or rejected by one party to the contract, and at the same time is unenforceable against that same party

Question 9

What is an unenforceable contract?

Answer 9

is a valid contract that cannot be enforced. Examples include contracts where enforcement is sought after the Statute of Limitations has expired, oral contracts which are required by the Statue of Frauds to be written (i.e., listings, deeds, etc.), and contracts the terms of which are unconsciousable

Question 10

What are executed and executory contracts?

Answer 10

refers to a contract where both parties have performed all that is required of them by the contract

Question 11

What is an express written contract?

Answer 11

For example, in a mortgage contract, the borrower promises to pay a certain monthly payment at a certain interest rate until the loan is satisfied

Question 12

What is an implied oral contract?

Answer 12

For example, when you order food at a restaurant, you are entering into an implied oral contract

Question 13

What is a meeting of the minds?

Answer 13

is a phrase in contract law used to describe the intentions of the parties forming the contract. In particular, it refers to the situation where there is a common understanding in the formation of the contract. Formation of a contract is initiated with a proposal or offer.

Question 14

What is a counteroffer?

Answer 14

is a rejection of an offer combined with a return proposal which created a new offer

Question 15

What is a consideration?

Answer 15

that each party must exchange with the other something of value such as the exchange of a promise for a promise, money for a promise or money for a forbearance

Question 16

What is a forbearance?

Answer 16

is a voluntary agreement to refrain from doing something that you have a legal right to do

Question 17

What is an earnest money deposit?

Answer 17

People often confuse the earnest money deposit with consideration. In the sale of real estate the consideration would be the exchange of promises to buy and sell at a set price, not the earnest money deposit. Earnest money, although customary (and important), is not essential to a valid contract