Contracts Flashcards
Valid
Contract possessing the essential elements to be legally enforceable.
Unenforceable
Potentially valid contract lacking legal force.
Void
Invalid contract lacking legal effect from inception.
Voidable
Potentially valid contract wherein one or more parties have the right to rescind.
In a bilateral contract, what kind of obligations are created
Recipical
Executory Contract
One that has not been executed
A binding contract on multiple parties
One or more of the parties has yet to perform their contractual duties
The importance of the distinction between executory and executed contracts can be seen in the ability to bring a case to court.
to identify its stages of its existence
4 Legal Remedies for Breach of Contract
Specific performance
Rescission
Forfeiture (liquidated damages)
Suit for damages (compensatory damages)
Breach of Contract - Specific Performance (1 of 4)
Obligates and forces either party fulfill the contract as originally agreed.
Breach of Contract - Rescission (2of 4)
both parties terminate contract amicably as it it never occurred requires the return of any monies
Breach of Contract - Forfeiture (3 of 4)
forfeiture provides a way to terminate the contract relationship but with compensatory identified as liquidated damages
Breach of Contract - Suit for Damages
(4 of 4)
The party injured by the breach of contract can initiate a suit for damages.
Liquidated Damages
identified in contract as to what damages are to be paid in the event of breach of contract.
Compensatory Damages
award given to a wronged party as compensation for actual injury or loss.
Punitive Damages
breach of contract suits, except in cases of fraudulent misrepresentation
Elements of a Service Contract.
(listing or buyers broker agreement)
The Must-Haves:
- Expiration Date.
- Property description.
- Listing Price & Terms.
- Broker Compensation.
- Principal signatures.
Elements of a Service Contract.
The Can’t-Haves:
- Provision requiring cancellation notice in addition to expiration date.
- Automatic renewal provisions.
Are Service contracts promulgated by the state?
NO meaning they don’t require you to use a specific contract and you can create your own.
procuring cause
is the individual or action(s) that brought a ready, willing, and able buyer to the transaction.
Action you did must prove it was the procuring cause that got buyer to purchase a property
Net Listings
broker is paid from remaining proceeds once closing costs and seller’s desired net amount are deducted
Exclusive Agency Listing
listing broker is only broker with a chance to earn commission but might not if seller procures the buyer
Exclusive right-of-sale listing
listing broker receives commission no matter what
Option contract
contract is unilateral Optionee Buyer agrees to pay Optionor (Seller) an amt to hold property The seller (Optionor) promises to sell property to Optionee. However Optionee buyer makes not promise and can cancel but loses his deposit.
What is the term for something of value that is deemed sufficient or appropriate for that which is offered in exchange?
consideration
Installment Sales Contracts
Seller finances sale of property Also known as contract for deed
Buyer Gets Equitable Title Only. He does not hold title and Buyer does NOT get legal title prior to paying off the loan.
Can be the promise to do or do nothing.
Addendum
introduction of new information to a contract prior to its being entered into
Amendment
a change of information contained in an existing contract
Contracts that you can NOT create
Deeds
Mortgages
Promissory notes
Lease agreements*
four essential elements of a valid contract.
LOL C :)
L egally competent parties
O ffer and acceptance
L awful objective
C onsideration
TRUE OR FALSE
unenforceable contracts can be fulfilled if both parties are willing. They just can’t be compelled (forced) to do so.
True
parol evidence rule is
the legal concept that says that oral evidence can be used to support a written contract but can NOT be used to contradict one
For Florida written contracts, the statute of limitations is how many years?
five years for contracts
four years for oral contracts
contracts for specific performance = 1 yr
doctrine of laches
unreasonable delay or negligence in asserting or defending one’s rights can create a legal bar to equitable relief if a delay or negligence
Similar to statute of limitations
Termination of an offer by Revocation
withdrawing the offer before acceptance has been communicated
What is fair to assume when talking about the discharge of contracts
contract must be executory and valid
force of law
is often used to underscore the legally compelling nature of the cause for the discharge of contracts
operation of law
can be for a discharge that is purely administrative in nature.
In what type of contract can a party potentially be exempted due to death or incapacity from their contractual obligations?
Personal Service Contracts
In real estate land, agency agreements (listing agreements and buyer representation agreements) are personal services contracts
but this is not always true as your agreement is between seller and brokerage not agent so contract could be re-assigned
What is the primary point of differentiation between contracts that discharge due to acts of the parties as opposed to those that discharge due to an operation of law?
Discharge between parties requires an “action” between one of the parties while Discharge in the operation of law does not.
Novation
is a mutual agreement of the parties to replace an existing contract with a new one
Accord and Satisfaction
parties agree to discharge the original contract in favor of a new one, wherein accepted performance is often less than what was initially owed.
“We really wanted the original performance required of the old contract but will accept the performance of the new (lesser) promise.”
Revocation and renunciation
Terminating agreement by which party
A principal revokes the agent’s authority to act on their behalf
Can also be the Seller in a Service agreement
An agent renounces
A properly constructed contingency contract clause will contain the following information:
How to satisfy the contingency
Contingency performance deadlines
Liable parties for associated costs.
Exclusive right-of-sale vs Exclusive Agency listing
Exclusive right-of-sale listing :
you will receive commission no matter who brings in the sale
Exclusive Agency listing:
the named listing broker is owed commission if the property is sold by anyone except if the owner procures sale.
A protection period
is a limited time frame after an agreement ends where the broker may still be entitled to a commission if specified people that the broker had already shown the property return to purchase the property.
Consent to Transition to Transaction Broker disclosure
Allows the broker to show all possible buyers the property without worrying about getting the form filled out in time if an in-house buyer materializes and wants to see the property right away.
Buyer brokerage agreements are service contracts made between
Buyer and the Broker
not the sales associate
All buyer brokerage agreements MUST have?
Expiration Date
Net Sheet for Seller
gives your client a good estimate of what they can expect to walk away with after all closing costs are considered
Clauses or paragraphs in a sales contract that address how conflicts and disputes will be handled between the parties
Dispute Resolution
Default
Attorney’s Fees;
Costs
At what point does a buyer get “equitable title” to a property?
Once the buyer signs a binding sales contract, they enjoy what is known as equitable title, a non-ownership right that establishes the buyer’s financial interest in the property until closing, at which point becomes legal title for the buyer.
What are the the minimal duties that are to be performed clearly indicate that ethical behavior is the expectation of a licensee.
D A D
Deal Honestly and fairly
Account for all funds
Disclose all known facts about property
fraud breaks down into four essential elements:
- A purposeful misrepresentation of a material fact is made (which can include the concealment of fact).
- The individual making the misrepresentation does so knowingly; they clearly understand that it is false.
- Another party relies on that misrepresentation.
- The party suffers actual loss as a result
informal contract
a parole contract (verbal) not under seal difficult to enforce
3 disclosures required in FL Sales contracts
Radon exposure
Lead paint
Flood Insurance
