Contract Fundamentals

Question 1

A contract in which the parties expressly enter into mutual agreement or engagements (IE A real estate sales contract) Each party promises to perform some act

Answer 1

Bilateral Contract

Question 2

1. Of sound mind, for the purposes of entering a contract or executing a will; not suffering from mental illness, retardation, or senility
2. Of sound mind and having reach the age of majority

Answer 2

Competent Parties

Question 3

Something of value given to another as compensation for entering into a contract

Answer 3

Consideration

Question 4

In agreement that the law will enforce. The elements of a “this” are mutual assent (offer and acceptance), consideration, competent parties, legal subject matter, and sometimes that the contract be in writing if required by the Statute of Frauds

Answer 4

Contract

Question 5

A contract that has been performed by the parties

Answer 5

Executed Contract

Question 6

A valid contract that has not been fully performed, such as a signed real estate contract prior to closing. In such cases, the buyer has equitable title. At close of escrow, the buyer would receive legal title

Answer 6

Executory Contract

Question 7

A contract that has been put into words, either spoken or written

Answer 7

Expressed Contract

Question 8

A contract based on one’s actions or deeds

Answer 8

Implied Contract

Question 9

A requirement for a contract whereby the objective of the agreement is lawful. Also called Legal Purpose

Answer 9

Legal Object

Question 10

The mutual agreement to all terms and conditions set forth in a contract by the parties involved; required for a valid contract. Also called Mutual Assent or Meeting of the Minds

Answer 10

Offer and Acceptance

Question 11

A law requiring that certain instruments be in writing to be enforceable, for example, contracts to sell real estate or leases for more than one year

Answer 11

Statute of Frauds

Question 12

A contract that is legally binding on only the one party who made a promise

Answer 12

Unilateral Contract

Question 13

Money or other valuables such as contributed labor, or good consideration, as with a gift (aka love and affection)

Answer 13

Valid Consideration

Question 14

The legal classification of a contract that is binding and enforceable in a court of law

Answer 14

Valid Contract

Question 15

Having no legal force or effect, for example, a contract with an illegal purpose

Answer 15

Void Contract or Invalid Contract

Question 16

A contract that one of the parties can disaffirm because it lacks a legal requirement or there’s a negative factor, such as fraud or duress

Answer 16

Voidable Contract