Contracts Flashcards
Elements of a Contract
(1) legally competent parties, (2) mutual consent between the parties, (3) lawful objective, and (4) sufficient consideration.
Termination of an Offer
Lapse of time: an offer is revoked if the offeree fails to accept it within a prescribed period Communication of notice of revocation: notice is filed by the offeror anytime before the other party has communicated acceptance Failure of offeree to fulfill a condition of acceptance prescribed by the offeror A qualified acceptance, or counteroffer by the offeree Rejection by the offeree Death or insanity of the offeror or offeree Unlawful object of the proposed contract
Genuine assent
A final requirement for mutual consent is that the offer and acceptance be genuine and freely made by all parties. Genuine assent does not exist if there is fraud, misrepresentation, mistake, duress, menace, or undue influence involved in reaching an agreement.
fraud
An act meant to deceive in order to get someone to part with something of value is called fraud. An outright lie, or making a promise with no intention of carrying it out, can be fraud. Lack of disclosure—causing someone to make or accept an offer—is also fraud. For example, failure to tell a prospective buyer that the roof leaks when he or she makes an offer to purchase on a sunny day is fraud. It can make the contract voidable.
innocent misrepresentation
When the person unknowingly provides wrong information, innocent misrepresentation occurs. Even though no dishonesty is involved, a contract may be rescinded or revoked by the party who feels misled. The hold harmless clause protects the broker from incorrect information.
Situations that Negate Genuine Assent
Fraud Misrepresentation Mistake Duress or Menace Undue Influence
consideration
something of value such as a promise of future payment, money, property, or personal services. For example, there can be an exchange of a promise for a promise, money for a promise, money for property, or goods for services. Legally, all contracts require acceptable consideration. Terms that denote acceptable consideration include valuable, adequate, good, or sufficient consideration.
Forbearance
forgiving a debt or obligation, or giving up an interest or a right, qualifies as valuable consideration. Gifts such as real property based solely on love and affection are good consideration. They meet the legal requirement that consideration be present in a contract.
Contracts That Must Be In Writing
Any agreement in which the terms are not to be performed within a year from making the contract A special promise to answer for the debt, default or no performance of another, except in cases covered by the Civil Code An agreement made upon the consideration of marriage, other than a mutual promise to marry An agreement to lease real property for a period longer than one year, or to sell real property or an interest therein; also, any agreement authorizing an agent to perform the above acts An agreement employing an agent, broker or any other person to purchase, sell or lease real estate for one year; or find a buyer, seller, lessee or lessor for more than one year in return for compensation An agreement, which by its terms is not to be performed during the lifetime of the promisor, or an agreement that devises or bequeaths any property, or makes provisions for any reason by will An agreement by a purchaser of real estate to pay a debt secured by a trust deed or mortgage on the property purchased, unless assumption of that debt by the purchaser is specifically designated in the conveyance of such property The statute of frauds also affects personal property. Personal property valued at more than $500 must be accompanied by a written bill of sale.
parol evidence rule
When two parties make verbal promises to each other, and then write and sign a contract promising something different, the written contract will be considered the valid one. Parol means oral, or by word of mouth. The parol evidence rule extends this meaning and prohibits introducing any kind of outside evidence to vary or add to the terms of deeds, contracts or other writings once executed. Under the parol evidence rule, when a contract is intended to be the parties’ complete and final agreement, no further outside promises, oral or written, are allowed.
Discharge of Contracts
Full performance Release by one or all of the parties Assignment Novation Breach of contract
Time Limits for Filing Civil Actions
90 Days Civil actions to recover personal property such as suitcases, clothing, or jewelry alleged to have been left at a hotel or in an apartment; must begin within 90 days after the owners depart from the personal property. 6 Months Action against an officer to recover property seized in an official capacity—such as by a tax collector. 1 Year Libel or slander, injury or death caused by wrongful act, or loss to depositor against a bank for the payment of a forged check. 2 Years Action on a contract, not in writing; action based on a policy of title insurance. 3 Years Action on a liability created by statute; action for trespass on or injury to real property, such as encroachment; action for relief on the grounds of fraud or mistake; attachment. 4 Years Action on any written contract; includes most real estate contracts. 10 Years Action on a judgment or decree of any court in the United States.
