Contracts Flashcards
A legally enforceable promise or set of promises between competent parties, upon legal consideration, to do or abstain from doing some legal act, for which, if breached, a remedy is provided by law
Contract
Formed by the suggestion of the parties’ acts and conduct.
Implied Contract
The terms are communicated in words, may be written or oral.
Express Contract
A contract in which only one party is obligated; ex. Option contract
Unilateral Contract
Both parties are obligated, ex. The seller must sell and the buyer must buy.
Bilateral Contract
One which has been signed but has not been fulfilled. Ex. A signed purchase agreement which has not closed.
Executory Contract
One in which all the parties have met all the terms and conditions of the contract.
Executed Contract
Contains all the essential elements of a contract and is binding and enforceable.
Valid Contract
Has not legal effect and is not binding on either party; no contract exists.
Void Contract
Null
One that is still binding but is flawed; that may be voided if the wronged party chooses.
Voidable Contract
Essential Elements of A Valid Contract
1 . Offer and acceptance
- Consideration
- Legal capacity
- Legal objective
- Disclosure
Items of material value
Valuable consideration
Things of abstract value such as love and affection.
Good consideration
Then there is intent to deceive; ex. lying
Actual Fraud
When there is not intent to harm. Ex. Breach of duty
Constructive Fraud
Errors regarding the facts of a contract
Mistakes of Fact
When a party, in full knowledge of facts, comes to an erroneous conclusion as to their legal ramifications.
Mistakes of Law
Allows one party to the contract to substitute a new contractual obligation for his original one.
Accord and Satisfaction
The substitution of one party to the contract with a new party
Novation
Cancellation of the contract as if it never existed.
Rescision
The concept that one may lose his legal rights if he inexcusably fails to exercise them within a reasonable time.
Laches
Seller retains the right to employ as many brokers as he wants.
Open Listing
Only one broker is hired, but the seller may still sell the property himself and not pay a commission
Exclusive Agency
Only one broker is hired as the agent; regardless of who sells the property, the seller must pay the broker a commission; most common type
Exclusive Right to Sell
The broker may legally accept as his commission all money from the sale in excess of the net price specified by the seller. Illegal in some states
Net Listing Clause
A monetary deposit is required. If either party fails to meet the obligations of the contract, he may sue for rescission, damages, or to have the sale completed
Specific Performance
A monetary deposit accompanying a contract. If either party defaults, he loses the amount of it
Earnest Money
The owner gives a prospective buyer the right to buy the property at a certain price for a certain period of time
Option
Also called land contract or contract for deed; a type of owner financing in which the seller retains title until the full
Installment Sale or Bond for Deed
Owner financing in which the buyer receives title at closing.
Purchase Money Mortgage
When a property is sold for less than one half the market value.
Lesion Beyond Moiety
The contract must be performed within the time limit specified.
Time is of the Essence
The buyer’s interest in the property after the contract to purchase is signed, but before title is actually transferred.
Equitable Title
