Contract Law 1 Flashcards
offer
The beginning point of any negotiation. One
party making a proposal to another party. Neither party is bound the terms of offer until
they come to an agreement.
acceptance
The next step after an offer. Has to be signed to be accepted and communicated back to the
other party to be fully accepted.
earnest money
If the earnest money is $0.00, then the
contract itself is consideration.
good consideration
Promise to perform. Good Consideration is the intent and the
valuable consideration
something you can determine the value on -
often said in deeds.
fraud
One party is doing something to mislead or
gain advantage of another party.
duress
Someone in a contract or negotiation process is put in strain or forced into doing something. Could make the contract unenforceable.
undue influence
Using a position of authority to unduly influence the seller to make a decision that
was not in their best interest.
A legally enforceable agreement between parties who agree to perform certain acts is called a(n):
A: Agreement
B: Acceptance
C: Contract
D: Option
C: Contract
What is an offer?
A: The Beginning Point Of Any Negotiation. One Party Making A Proposal To Another Party.
B: The Ability To Purchase A Property
C: The Beginning Stages Of Purchasing A Home
D: Giving An Offer To A Property For A Spouse
A: The Beginning Point Of Any Negotiation. One Party Making A Proposal To Another Party.
How will you describe an acceptance?
A: The Next Step After An Offer. Has To Be Signed To Be Accepted And Communicated Back To The Other Party To Be Fully Accepted
B: When One Party Agrees
C: Understanding And Debating The Offer
D: Giving Time To Decide On The Offer
A: The Next Step After An Offer. Has To Be Signed To Be Accepted And Communicated Back To The Other Party To Be Fully Accepted
Why is consideration important?
A: It Allows The Buyer To Look At Their Options
B: Something Of Value, Typically Earnest Money, Offered To Tie Into The Contract As A Promise To Perform
C: It Allows The Seller Time To Look At Their Options
D: Giving A Commitment To The House
B: Something Of Value, Typically Earnest Money, Offered To Tie Into The Contract As A Promise To Perform
What is fraud?
A: Making Errors And Not Telling The Buyer
B: One Party Is Doing Something To Mislead Or Gain Advantage Of Another Party
C: Learning To Forgive Someone After A Mistake
D: Accepting The Conditions On A Contract
B: One Party Is Doing Something To Mislead Or Gain Advantage Of Another Party
What is duress?
A: Signing The Final Contract
B: Getting Someone To Do Something Against Their Will Or Better Judgment
C: Not Disclosing The Terms Of The Contract
D: Talking About Market Cycles And Future Predictions
B: Getting Someone To Do Something Against Their Will Or Better Judgment
A ________ is a mutual arrangement between two parties by which each party promises to perform an act in exchange for the other party’s act.
A: Common Agreement Contract
B: Bilateral Contract
C: Exchange Contract
D: None Of The Above
B: Bilateral Contract
consideration
Something of value, typically earnest money, offered to tie into the contract as a promise to perform. Giving something of value to give the
offer ability and stability.
express contract
A contract that is written or oral- with
intent.
implied contract
A contract conveyed by actions- accidental.
statute of frauds
Any contracts of real estate have to be in
writing.
bilateral vs unilateral
Bilateral is two parties enter an agreement
with set terms and both parties agree. Unilateral is one party making an offer that could become a contract. There are no
expectations until they perform.
fully executed contract
Terms are met, fulfilled and signed.
executory contract
Something is left undone. A portion of the
contract has not been completed yet.
fully executed executory contract
For example: buying a house- all of the qualifications have been met except the funds haven’t been delivered. The contract has been executed on seller’s part, but the buyer still has something outstanding so it’s executory on their part.
four essentials
of a contract
-Meeting of the Minds (Offer and Acceptance)
-Consideration,
-Legally Competent Parties,
-Legal Purpose.
Real estate contracts have a fifth essential
-must be in writing.
Mutual agreement means:
A: A Meeting Of The Minds
B: The Contract Is Valid
C: The Contract Is Void
D: The Contract Is Unilateral
A: A Meeting Of The Minds
Something of value promised by one party in exchange for an interest or benefit to the other party is called:
A: Consent
B: Legal Purpose
C: Acceptance
D: Consideration
D: Consideration
Buyer Bob and Seller Sue enter into a written contract for the sale of Sue’s home. This would be an example of a(n)
A: Implied Contract
B: Express Contract
C: Unenforceable Contract
D: Mutual Contract
B: Express Contract
The Real Estate Purchase Contract is an example of a:
A: Bilateral Contract
B: Unilateral Contract
C: Communicated Contract
D: Competent Contract
A: Bilateral Contract
What are the important components of a fully executed contract?
A: Where All The Terms And Conditions Are Met
B: The Contract Is Behind The Deadline
C: Not Making Payments On The Contract
D: Not Disclosing All The Information On The Contract
A: Where All The Terms And Conditions Are Met
The four required elements of a contract do NOT include:
A: Mutual Agreement, Consideration
B: Consideration, Capacity
C: Mutual Agreement, Legal Purpose
D: Legal Purpose, In Writing
D: Legal Purpose, In Writing
The five required elements of a Real Estate Contract include:
A: Mutual Agreement, Consideration
B: Consideration, Capacity
C: Mutual Agreement, Legal Purpose
D: All Of The Above
D: All Of The Above
valid
When all of the Essential Elements of a
contract are in place.
void
When one of the Essential Elements are
missing.
voidable
When one of the Essential Elements are in
question.
enforceable
Has the Essential Elements and the terms can be met or can move forward in a legal
fashion that can be fully executed.
unenforceable
Appears to be a valid contract because the terms are all there, but not enforceable
because of something illegal.
The type of contract that may be valid, but a court will not entertain disputes arising out of these agreements:
A: Valid
B: Void
C: Voidable
D: Unenforceable
D: Unenforceable
What is enforceable ?
A: Has The Essential Elements And The Terms Can Be Met Or Can Move Forward In A Legal Fashion That Can Be Fully Executed
B: Having The Clients Complete Documents Without Their Consent
C: Making Decisions On Behalf Of Someone
D: Completing All Forms For The Transactions
A: Has The Essential Elements And The Terms Can Be Met Or Can Move Forward In A Legal Fashion That Can Be Fully Executed
What is voidable?
A: When The Contract Is Void
B: When One Of The Essential Questions Are In Question
C: Not Submitting Forms For The Transaction
D: Errors On The Contract
B: When One Of The Essential Questions Are In Question
What makes the contract or transaction valid?
A: When Some Parts Of The Contract Are Complete
B: When All Items Of The Contract Are In Place
C: Providing More Information On The Contract
D: When 80% Of The Contract Is Complete
B: When All Items Of The Contract Are In Place
monetary vs liquidated damages
Monetary Damages is actual damages, specific costs tied to the default. Liquidated Damages is what the contract provides for — in a Purchase Agreement the most common is the earnest money.
mistakes or fact of law
Leaving something out of contract, wording
it incorrectly, and improper disclosures.
fraud or misrepresentation
Creating a lie or untruth. Committing a
fraud. Omission of important information.
counter offer
When offer goes to the other side and they counter, they are essentially writing a new offer back. Therefore the Counteror becomes the Counteree.
termination
Ways to terminate a contract are by fully executing the contract, having the inability to
perform, or if both parties agree to terminate.
Why is contract law so important
Contract law is important because it gives an accountability enforceability to a promise that was made
What are the Essential Elements of a
Contract?
1) Offer
2) Acceptance
3) Consideration
4) Mutuality of obligation
5) Competence
6) Written documentation
Why are Contracts Essential?
Contracts allow all parties involved to set expectations and puts in place a set of guidelines that must be followed by all parties involved.
Purpose of Contract Law
This is primarily to enforce the agreements between parties involved.
Privity of Contract
- Privity of Contract refers to relationship between the parties to a contract which will allow them to sue each other
- This will prevent from a third party being involved
Consideration
Essential element in contracts of law: Consideration is a benefit which must be negotiated for between the parties,
and is an imperative reason for a party entering into a contract
Breach of a Contract
When a breach of contract occurs, one or both of the parties may wish to have the contract enforced on its regulations and terms
Authorized Signatures
Legally, to make the contract official, it must be signed by a person who has thew authority to do so.
Damaged assessed for non-performance of a contract that are agreed upon in advance when actual damages might be hard to establish are called:
A: Monetary Damages
B: Liquidated Damages
C: Punitive Damages
D: Specific Performance Damages
B: Liquidated Damages
What is a counter offer?
A: An Offer Made In Response To Another
B: Similar Offers
C: An Offer That Is Lower Compare To The Sale Price
D: Different Types Of Offers
A: An Offer Made In Response To Another
Agency agreements can be terminated when:
A: One Of The Parties To The Contract Dies
B: The Contract Expires
C: The Duties Set Forth In The Contract Have Been Performed
D: All Of The Above
D: All Of The Above
What is termination?
A: Having The Inability To Perform On The Terms, Of If Both Parties Agree To Terminate
B: If One Part Contract Is Terminated
C: Allowing The Contract To Continue Under Different Conditions
D: If One Party Agrees And The Other Does Not
A: Having The Inability To Perform On The Terms, Of If Both Parties Agree To Terminate
Kaycee and Tyler are out on a drive. They find a home for sale and they absolutely love it. They verbally offer to buy the house and name a price. The seller verbally agrees. What kind of contract is this?
A: Void
B: Executory
C: Unenforcable
D: Unilateral
C: Unenforcable
Jason signs a 6 month listing agreement with Agent Alex. 3 months later, Jason dies in a car accident. What is the status of this listing agreement?
A: The Listing Agreement Automatically Terminated When Jason Died.
B: The Listing Agreement Is Still Valid For The Remaining 3 Months.
C: The Listing Agreement Is Still Valid For Remaining 3 Months, But Only If Agent Alex Has Procured A Buyer That Is Under Contract.
D: Agent Alex Should Continue To Market Jason’s Home To Honor His Memory.
A: The Listing Agreement Automatically Terminated When Jason Died.
In order for a contract to be VOID:
A: One Or More Of The Essential Elements Are Missing
B: Undue Influence Has To Have Occurred
C: One Of The Parties Has To Lack Competence
D: The Contract Is Unenforceable
A: One Or More Of The Essential Elements Are Missing
The law that states that all real estate contracts have to be in writing is called:
A: The Statute Of Limitations
B: The Statute Of Law
C: The Statute Of Frauds
D: The Statute Of Contract
C: The Statute Of Frauds
A contract has been signed by one party but not the other party. This contract is:
A: Executory
B: Executed
C: Subprime Contract
D: None Of The Above
A: Executory
When undue influence or duress are involved, the contract is:
A: Void
B: Voidable
C: Unenforceable
D: Valid
B: Voidable
When all of the essential elements of a contract are in place. This is often referred to as ________
A: Acceptance
B: Acknowledgement
C: Valid
D: Recission
C: Valid
Molly makes an offer on a property and submits $1000 Earnest Money with her offer. Susan counter’s Molly’s offer. Molly does not accept Susan’s counter. Molly wants her Earnest Money back. Susan claims the Earnest Money belongs to her. In this situation, the broker should:
A: Keep The Earnest Money In The Brokerage Trust Account
B: Return The Earnest Money To Molly
C: Give The Earnest Money To Susan
D: Give The Earnest Money To The State
B: Return The Earnest Money To Molly
A statement that is TRUE about Voidable contracts is that they are:
A: Illegal
B: Valid Unless Voided
C: Void
D: Unenforceable
B: Valid Unless Voided
The four elements of a contract include:
A: Offer And Acceptance
B: Consideration
C: Legally Competent Parties
D: All Of The Above
D: All Of The Above
