Contracts

Question 1

What makes a contract valid?

Answer 1

-Offer and acceptance.
-Consideration.
-Competent parties.
-Reality of consent (meeting of the minds).
-Legal object.

Question 2

What is a voidable contract?

Answer 2

It can be enforced or rejected by one side.
-Unilateral mistake.
-Misrepresentation/fraud
-Undue influence
-Intoxication
-Minor

Question 3

What is the Statue of Limitations on a real estate contract?

Answer 3

Six years.

Question 4

What makes a contract void?

Answer 4

It has no legal effect.
-Illegal purpose.
-Mutual mistake.
-Insane or mentally incompetent person.

Question 5

What makes a contract enforceable?

Answer 5

-Statute of Frauds - Does the contract have to be in writing?
-Statue of Limitations
-Unconscionable - Are the contract terms shocking to the conscience? Fair to both parties?

Question 6

Expressed contract

Answer 6

A contract that is stated with words.

Question 7

Implied contract

Answer 7

A contract that is implied by your actions. For example, paying for food that you eat at a restaurant.

Question 8

Executory contract

Answer 8

A contract that has not had all the promises completed yet. “Puts the parties to work.”
Example: Agreement of sale.

Question 9

Bilateral contract

Answer 9

Contract where both parties are making promises.
Examples: Agreement of sale, leases.

Question 10

Unilateral contract

Answer 10

Contract where only one party is making a promise. Only one party needs to sign and can be in breach.
Examples: Deed, option.

Question 11

What type of contract is an Option?

Answer 11

An expressed, unilateral, executory contact.

Question 12

Executed contract

Answer 12

A contract that is complete. The object has been accomplished.
Example: Deed

Question 13

What are the possible remedies of a breach?

Answer 13

-Compensatory damages - Actual demonstratable financial loss.
-Rescission of the contract - Both parties agree to walk away and release each other from liability.
-Specific performance - Party in breach is forced to complete the action
-Retain buyer’s deposit (Seller only) - Liquidated damages

Question 14

What states that a written contract takes precedence over oral agreements?

Answer 14

Parol evidence rule.

Question 15

How long does the attorney review last and when is it used?

Answer 15

Three business days (after signing).
-Contracts of sale prepared up by real estate licensee.
-Leases prepared by a licensee for a period of a year or more.

Question 16

What contracts can a real estate licensee draw up?

Answer 16

-Contracts of sale on 1-4 family RESIDENTIAL properties
-Contracts of sale on vacant single lots (not full tracts)
-Leases on RESIDENTAL properties

Question 17

Who can disapprove a contract during attorney review?

Answer 17

An attorney

Question 18

What is it called when one party transfers their rights and/or duties under a contract?

Answer 18

Assignment

Question 19

Novation

Answer 19

The substitution of a new contract for an existing agreement

Question 20

How long does a buyer have to cancel a contract if lead-based paint is found in a survey?

Answer 20

10 days

Question 21

The process often explained as the “meeting of the minds”.

Answer 21

Offer and acceptance.

Question 22

In what time period is a broker responsible for depositing funds used as earnest money into an escrow/trust account?

Answer 22

Five business days.

Question 23

For which type of property do the buyers have a seven day period in which they may cancel the sales contract?

Answer 23

Newly built condominiums.