Contracts Flashcards
Acceptance of an offer to purchase creates a contract and is referred to as a
a. contract creation
b. valid consideration
c. meeting of the minds
d. legal object
C.
A legally enforceable agreement involving two parties, each of which make a promise, is considered a Unilateral or Bilateral contract?
Bilateral Contract
A contract in which the parties have performed all of the provisions is
executory or executed
Executed
An option is an example of a contract that is
unilateral or bilateral
Unilateral
NOTE!!!
OPTIONS AND RIGHTS OF FIRST REFUSAL AREUNILATERAL
CONTRACTS
REMEMBER THE OPTION IS BINDING ONLY TO THE OPTIONOR (OWNER)
WHAT IS AN “OPTION”
Best way to memorize this…
“ I PROMISE TO SELL/LEASE IF YOU DECIDE TO SELL/LEASE”
OPTION (a contract to purchase a lease or exchange a right)
OPTIONEE (prospective buyer/purchaser)
OPTIONOR (owner)
NAME THE SIX ESSENTIAL ELEMENTS OF A CONTRACT
COMPETENT PARTIES
CONSIDERATION
OFFER AND ACCEPTANCE (meeting of the minds)
LAWFUL OBJECT/PURPOSE
BE IN WRITING
PROPER DESCRIPTION OF PROPERTY
A contract in which all the terms are specifed is
a. implied contract
b. expressed “
c. unilateral “
d. executed
B. expressed
A contract created by a party’s actions is an
implied or expressed contract
implied
A contract in which all terms have yet to be performed
executory or executed
executed
A tenant is leasing a property which the tenant is interested in buying. The owners are not sure they want to sell at this time. What type of contract would give the owners the most freedom of choice
a. option
b. purchase contract
c. right of first refusal
d. lease option
C.
What are the Essential Elements of a Contract?
*6 elements
- Compentent Parties
- Valid Consideration or Good Consideration
- Offer and Acceptance (Meeting of the Minds)
- Legal Object or Purpose
- Be in Writing
- Proper Description of the Property-must be specific to identify the parcel
*AZ law recognizes the validity of electronic records, signatures, and contracts.
What are the 9 classifications of contracts?
1.Expressed
2.Implied
3.Executory
4.Executed
5.Bilateral, ex: purchase contracts & leases
6.unilateral, ex: options and rights of first refusal
7.valid
8. Void or Invalid
9. Voidable
If agent A takes an open listing for six months on March 1 and agent B takes an exclusive right to sell listing on March 15 for three months but agent A find a buyer on April 15, what may occur?
a. only agent A is owed commission
b. only agent B is owed commission
c. the seller may owe both agents a commission
d. no commission is owed to either agent
B.
Which of the following elements is not essential to a binding contract?
a. lawful object
b. legally competent parties
c. monetary consideration
d. meeting of the minds
C.
**Money OR other valuables such as contributed labor, or GOOD CONSIDERATION* as with a gift (aka love and affection)
An owner sells the property himself and will not owe a commission in all of the following except:
a. open listing
b. open net listing
c. exclusive agency listing
d. exclusive right to sell listing
D.
A listing agreement where the broker will be paid even if the property is sold by another broker is a(n):
a. open listing
b. net listing
c. exclusive agency listing
d. pocket listing
C.
*HOWEVER, Seller reserves the right to sell the property without paying a commission
Listing = Employment Agreement
By law real estate employment contracts require what 3 elements:
a) Must have an inception and expiration date and may not include auto renewal provisions
b) Must be signed by all parties
c) May not be assigned to third parties without all parties’ consent
Which of the following items is req’d to be in a listing?
a. street address
b. rate of commission
c. termination date
d. mortgage debt amount
C.
A seller enters into an exclusive right to sell listing w/ a broker who has some subagents. Both the broker and subagents show the property extensively, but the seller finds a buyer directly. In this situation:
a. the subagents are entitled to a commission
b. the listing broker is owed a commission
c. the seller doesn’t owe anyone a commission
d. the seller owes a fee to both the listing broker and the subagents.
B.
Seller owes listing broker no matter what
A contract contains the following language: “No changes to this agreement may be made without the prior written consent of both parties.” What type of communication would be acceptable to alter the agreement?
a. a faxed notice delivered by one party
b. an email communication from one party received and accepted by the other party
c. a phone conversation between the parteis’ agents
d. an addendum prepared by on of the parties
B.
An oral agreement for the sale of real property is
a. unenforceable
b. void
c. enforceable
d. voidable
A.
A contract based on an illegal consideration is
a. valid
b. void
c. legal
d. illegal
B.
What type of listing provides fiduciary duties to the seller while protecting the broker’s best interests?
a. open
b. exclusive agenby
c. exclusive right to sell
d. net
C.
Competent Parties, Legal Consideration (valuable or good consideration, Offer and Acceptance, Legal Object or Purpose, Be In Writing, and Proper Description of the Property are components of what?
Essential Elements of a Contract
Contract Classifications…Name them:
Expressed/Implied
Unilateral/Bilateral
Executory/Executed
Valid/Void/Voidable/Unenforceable
What are the classifications for a contract in creation:
Expressed
Implied
What is the classification for a contract promise?
Unilateral
Bilateral
How do you classify the status of a contract?
Executory
Executed
What are the ways to classify the validity of a contract?
Valid
Void
Voidable
Unenforceable
Contracts that MUST be in writing include:
1
2
3
4
5 Exceptions:
6 Parole Evidence Rule:
- employment agreement
- an agreement for the transfer or sale of real property or an interest
- a lease for MORE THAN ONE YEAR.
- ANY agreement that is NOT to be performed within ONE YEAR
- Exceptions:
a. leases of one year or less
b. Broker to Broker verbal compensation agreements - Parol Evidence rule - a written contract. The agreement stands within the four corners of the contract preventing verbal testimony
Most contracts must be in writing because of The ____ of ______
Statue of Frauds
Acceptance of an offer to purchase creates a contract and is referred to as a:
Meeting of the Minds or Mutual Assent
The type of consideration given when the property is transferred as a gift is:
Good consideration or Love and Affection
A legally enforceable agreement involving two parties, each of which make a promise is considered a:
Bilateral contract
A contract in which the parties have performed all of the provisions is:
Executed contract
An option is an example of a contract that is: Unilateral or Bilateral
Unilateral
A contract to do something illegal is:
void
A contract that is missing one of the essential elements is:
void or invalid
A contract in which all the terms are specified is a(n):
Expressed contract
A contract created by a party’s actions is a(n):
Implied contract
A contract in which all terms have yet to be performed is a(n):
Executory contract
A contract in which only one party makes a promise is a:
Unilateral contract
By law, ?(name the
written agreement)?:
*Must have an inception and expiration date and may not include automatic renewal provision
*Must be signed by all parties
*May not be assigned to third parties without all parties consent
Employment Agreement
Real Estate employment contracts
What is the written agreement that authorizes or employs a broker to purchase, sell, or manage real property for compensation or commission?
Employment Agreement
The listing agreement is between the property owner and the:
Broker
The listing agreement in which the seller hires numerous brokers is the:
Open Listing
The listing agreement that allows for the broker to be paid a commission regardless of who sells the property is the:
Exclusive Right To Sell Listing
The listing agreement which allow the seller to sell the property and not pay a commission are the:
1
2
Open Listing
Exclusive Agency Listing
With a ___________, the seller will receive a predetermined amount from the sale of the property.
Net Listing
The broker would consider the _____________ to be the most desirable listing.
Exclusive Right to Sell Listing
The exclusive right to sell listing is a ___________ contract because the agent has promised to find a ready, willing and able buyer, and the seller has promised to pay a commission if the buyer is procured.
Bilateral
An employment contract in which the buyer hires the broker is a(n):
Buyer-Broker agreement
The law that prohibits anti-competitive practices is the:
* Think antitrust***
___________ antitrust act of 1890
Sherman (lol the Sherminator!!) Act of 1890
Once an option agreement has been exercised, it gives rise to a new contract. What is the status of the new contract?
Unilateral executed
Bilateral executed
Unilateral executory
Bilateral executory
Bilateral Executory
Here’s why (page 37 under Option A. 4:
The exercise of the option by the optionee leads to a bilateral contract to lease or purchase
