Chapter Eleven

Question 0

a change to the existing content of a contract (i.e., if words or provisions are added to or deleted from the body of the contract). Must be initialed by all parties. 187

Answer 0

amendment

Question 1

any provision added to an existing contract without altering the content of the original. Must be signed by all parties. 187

Answer 1

addendum

Question 2

the transfer in writing of interest in a bond, mortgage, lease, or other instrument. 180

Answer 2

assignment

Question 3

a legally enforceable promise or set of promises by which all parties to the instrument are legally bound to act as prescribed, that must be performed and for which if a breach of the promise occurs, the law provides a remedy. 176

Answer 3

bilateral contract

Question 4

violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due. 180-181

Answer 4

breach of contract

Question 5

1) that received by the grantor in exchange for his or her deed. 2) Something of value that induces a person to enter a contract. 178

Answer 5

consideration

Question 6

a provision in a contract that requires a certain act to be done or a certain event to occur beofre the contract becomes binding. 186

Answer 6

contingency

Question 7

a voluntary, legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. 176

Answer 7

contract

Question 8

a new offer made in response to an offer received. It has the effect of rejecting the original the original offer, which cannot be accepted thereafter unless revived by the officer. 183

Answer 8

counteroffer

Question 9

relevant information or facts that are known or should have been known. 50-51

Answer 9

disclosure

Question 10

money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but to be applied to the purchase price if the sale is closed. 184

Answer 10

earnest money

Question 11

the interest held by a vendee under a contract for deed or an installment contract; the right to obtain absolute ownership to property when legal title is held in another’s name. 184-185

Answer 11

equitable title

Question 12

an agreement between a buyer, a seller, and an escrow holder setting forth rights and responsibilities of each. It is entered into when earnest money is deposited in a broker’s account for business. 184

Answer 12

escrow contract

Question 13

a contract in which all parties have fulfilled their promises and thus performed the contract. 177

Answer 13

executed contract

Question 14

a contract under which something remains to be done by one or more of the parties. 177

Answer 14

executory contract

Question 15

an oral or written contract in which the parties state the contract’s terms and express their intentions in words. 47

Answer 15

express contract/express agreement

Question 16

a contract under which the agreement of the parties is demonstrated by their acts and conduct. 47

Answer 16

implied agreement/implied contract

Question 17

a transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year. 436

Answer 17

installment sale/land contract

Question 18

an amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract. 185

Answer 18

liquidated damages

Question 19

substituting a new obligation for an old one or substituting new parties to an existing obligation. 180

Answer 19

navation

Question 20

two essential components of a valid contract; a “meeting of the minds.” 170

Answer 20

offer and acceptance

Question 21

an agreement to keep open for a set period an offer to sell or purchase property. 187

Answer 21

option

Question 22

the practice of one party canceling or terminating a contract, which has the effect of returning the parties to their original positions before the contract was made. 181

Answer 22

rescission

Question 23

that part of a state law that requires certain instruments, such as deeds, real estate sales contracts, and certain leases, to be in writing to be legally enforceable. 194

Answer 23

statute of frauds

Question 24

If the seller breaches a real estate sales contract, the buyer may sue, asking the court to force the seller to go through with the sale and convey the property as previously agreed. 181

Answer 24

suit for specific performance

Question 25

A phrase in a contract that requires the performance of a certain act within a stated period of time. 180

Answer 25

time is of the essence

Question 26

a contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it. for example, an unsigned contract. 179

Answer 26

unenforceable contract

Question 27

a one-sided contract wherein one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligted to keep the promise. 177

Answer 27

unilateral contract

Question 28

a contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it. 179

Answer 28

valid contract

Question 29

a contract that has no legal force or effect because it does not meet the essential elements of a contract. 179

Answer 29

void contract

Question 30

a contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties. 179

Answer 30

voidable contract

Question 31

an agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser’s good faith and intent to complete the transaction. 184

Answer 31

binder