Contracts Flashcards
Requirements of Valid Contracts
- Mutual agreement
- Consideration
- Legally competent parties
- Lawful purpose
- Legal form
Attorney-In-Fact
A person who is authorized to act for another under a power of attorney, which may be general or limited in scope.
Consideration
The benefit received by the parties to a contract (ex: money, personal services, love and affection).
Lawful Purpose
A contract that exists substantially for the purpose of requiring an illegal act is VOID.
Novation
Substitution of a revised agreement for an existing one, with the consent of all parties involved
Liquidated Damages
An amount agreed upon in a contract that one party will pay the other in the event of a breach of the contract
Requirements of a Valid Contract of Sale
- The interests and identities of the parties
- Legal description of the real estate
- The price and how it is to be paid
- Contingencies and other terms of sale
- Settlement date
- Signatures of parties
Contract for Exchange
Used when principals want to exchange property
- under section 1031 of the Internal Revenue Code, like kind property used in a trade or business or held as an investment can be exchanged tax free
- delayed or deferred exchanges are now allowed
Boot
Personal property put into an exchange to equalize the value of all property exchanged (ex: cash, cars, diamonds)
Contracts for Deed (land contract, installment land sale contract)
The property seller finances the sale but does not surrender the deed until all payments have been made
*allows the purchaser to gain possession but not ownership of the land while paying for it
Option
Gives its holder the right but not the obligation to buy specific property within a certain time at a specified price
*holder may buy the property, sell the option to another, or not buy the land
Assignment
The transfer of a contract - the assignor is not automatically relieved of his duties to other parties under the earlier contract