Contracts Flashcards
Expressed agreement:
And oral or written contract, in which the parties state the contract terms and express their intentions and words
Implied agreement
A contract in which the agreement of the parties is demonstrated by their acts and conduct
Verbal agreements are valid but not what?
Agreements are valid but not enforceable
Bilateral
In which both parties promise to do something. (A promise for a promise)
Unilateral
In which one party promises to do something if the other party acts.
* seller has to fix a window
Executed
Everything has been done, all promises fulfilled and performed under the contract.
Executory
Something remains to be completed in the contract
During the period of time after a real estate sales contract is signed, but before the title actually passes, the status of the contract is what?
Voidable, executory, unilateral, or implied
Executory
A contract in which one party makes a promise in exchange for a promise from another is a?
Invalid, illegal, unilateral contract, bilateral contract
Bilateral contract
Buyer and seller except a contract. The contract has contingencies that have not been met. The contract is?
Executory or Executed
Executory
In option (one sided) contract is signed by Bart the seller and Vanita the buyer. What is the status of the contract?
Unilateral contract
Bilateral contract
Executory bilateral contract
Executory unilateral contract
Executory unilateral contract
Today, a seller entered into a written, exclusive-right-to-sell listing with able realty. Which of the following best describes the listing contract?
It is an express, bilateral, executed contract
It is an implied, bilateral, executed contract
It is an implied, unilateral, executed contract
It is an express, bilateral, executory contract
It is an express, bilateral, executory contract
A broker offers a $10,000 bonus to the first sales person That could make five sales in a week. What type of contract is this?
Unilateral
Executed
Bilateral
Conditional
Unilateral
Broker Jana was accused of violating antitrust laws. One of the following, she was most likely accused of:
Not having equal housing opportunity sign in her office window
Undisclosed dual agencies
Price fixing
Dealing in unlicensed exchange services
Price-fixing
I am a broker with ABC real estate. I have established commission rates and fees for my company and expect my sales people to charge that rate can this be seen as a conspiracy?
No
XT X publications have increased they’re advertising rates substantially, which hurts all real estate companies in town. To pressure the publication to reduce rates, which would benefit the company’s and consumers, the real estate companies may agree to stop advertising with the publication until the rates are lowered.
True or false
False
George, one of my sales associates, attends association meeting and participates in a price-fixing discussion. Because I did not encourage. Or participate in the discussion, I am not liable for George’s conduct.
True or False
False
The amount of commission is paid to a salesperson is determined by what?
State law
The local real estate board
Mutual agreement with the broker
Mutual agreement with the client
Mutual agreement with the broker
In a typical agency relationship between broker and client, the brokers commission is determined by
State law
The local real estate board
Mutual agreement
Minimums based on the property type
Mutual agreement
Elements needed for a valid contract:
- Offer and acceptance: know the difference between an offer in a contract! Real estate contracts must be in writing as set forth in the statute of fraud’s to be enforceable.
- Consideration: in a sales contract, the consideration is that agreed upon selling price of the property
- Reality of consent: no pressure from someone else to sign
- Legally competent parties: of legal age and sound mind
- Legal purpose: A contract to commit in illegal act is void
Until the buyer and seller have both signed the papers, it is just an offer
Once an offer is excepted and signed, it must be communicated back to the person who made the offer (offeror) before it becomes a contract
And offer may be withdrawn at any time, prior to being accepted!!!
- As long as you can rescind the offer before the other agent says it’s excepted then you can rescind the offer
- if the agent has communicated back is the signed an excepted contract…. that’s illegal and an excepted contract
Void
On the paper
Voidable
On the person
Arm’s-length transaction is a transaction in which the parties are dealing from he will bargaining positions?
true or false
True
What is a valid contract:
It has all legal elements and is fully enforceable
What is a void contract
Lacks one or all elementary has no legal force or effect. It was never seen as a valid contract in the eyes of the law. Example; the use of a forged signature or a fake name in a listing contract with make the contract void. The intent was for illegal purposes
Where is a voidable contract?
Has all the legal elements on the surface, but maybe resend it or disaffirm to buy either party when it comes to light that something was not legal initially.
Example; a contract made by a minor is voidable: someone who signed under duress or under influence. Voidable contract can be terminated but it must be done by one of the parties whereas avoid contract was not even valid to begin with. A minor is less than 18 years of age
Parole evidence rule
States of the final written agreement has the last word regarding the contractual agreement-the parties can’t be held to do something verbal if it differs from the contract
Unenforceable contract
I’ll contract for the sale of real property are not necessarily void but they must be in writing to be enforceable. Under the statute of fraud’s oral agreements are unenforceable and not recognized by the courts
A bilateral contract is one
- Which applies only to leases?
- Where one party is given an option to perform?
- A promise by one party is given in exchange for a promise by another party?
- Where one party agrees to perform?
I promise by one party is given in exchange for a promise by another party
If duress or undue influence is applied to one party to a contract this would make the contract?
Invalid
Void
Unenforceable
Voidable
Voidable
Oral contracts for the sale of real property or not necessarily void, but are enforceable because of what?
The law of agency
Statute of limitations
Doctrine of laches
The statute of fraud
The statute of frauds
A broker took a listing in later discovered that the client had been declared legally incompetent before signing the listing. The listing is now?
A finding because the broker was acting as the owners agent in good faith
B of no value to the broker because it is void
C The basis for the recovery of a commission if the broker produces a buyer
D renegotiable
B of Novell you to the broker because it is void
In order for a contract to be valid, the offeree must except the offer before what?
The offer expires
A broker found a buyer that wrote an offer on the sellers property. The buyer offered 152,000 with $2000 earnest money. The broker has called and left messages for the seller in attempt to present the offer. What is the status of this offer?
It is an offer - (and that’s it)
Sam enters into a contract to sell a parcel of land to Allison. During the course of the negotiations. Sam wrongfully represents the nature of the soil. Which of the following best describes the status of the contract?
A void
B voidable by Sam because of mistake
C voidable by Alison because of misrepresentation
D voidable by neither because no harm has been done
C voidable by Alison because of misrepresentation
If, upon the receipt of an offer to purchase his property subject to certain conditions, the seller makes a counter offer, the prospective buyer is? A bound by his original offer B bound to except the counter offer C bound by whichever offer is lower D relieved of his original offer
D relieved of his original offer
Voidable contract is one that appears valid and enforceable on its face it is subject to rescission by one of the parties who acted under duress, undue influence, was a minor, or judged to be incompetent. True or false?
True
Time is of the essence
In a contract, the phrase means that the steps must be performed within a certain timeframe or the party is guilty of breach of contract
Assignment
An assignment of contract occurs when one party to an existing contract (the assignor) hands off the contract obligations and benefits to another party (the assignee). Most contracts can be transferred so long as the contract doesn’t have a provision that prohibits assignments
Novation
Substituting a new contract for an old one. It releases the liability/obligations of the first contract.
If someone assumes you’re alone-the lender gives you an ovation saying that you are not liable if the person assuming your loan doesn’t pay then you would not be liable to take the loan back and make payments again
Earnest money
Cash deposit-check or money order etc.-that shows the buyers intention to carry out the terms of the contract. Although customary, earnest money is not required by law. The earnest money is credited to the buyer at closing. Earnest money can be anything tangible.
Counter offer
Also called qualified acceptance, any attempt by seller to change the terms proposed by the buyer. This may be revoked at any time prior to acceptance. The original offer is terminated upon the counter offer being presented. This no longer obligates the buyer to their original offer.
Contingency
Terms or conditions of the contract that requires a certain activity done or certain event to occur before the contract is binding. Examples are inspections appraisal loan commitment or title
Option
In agreement to keep open for a set period of time, and offered to sell or lease real property. And option can be used to give the buyer time to resolve questions of financing, tile, zoning etc. before committing the buyer to the purchase.
- *And option is an example of A unilateral contract.
- The seller (optionor) is obligated to sell if given notice by the buyer (optionee) that they wish to move forward. However, under an option contract the buyer is not obligated to purchase they are giving themselves time to figure things out or get off the hook.
Equitable title
The interest of by your house and the property between time of acceptance of contract and closing.
(Once it closes the buyer has legal title but until then it is considered equitable title)
Equitable title is actual lawful ownership of real property, evidence of title, and interest in real property created by the execution of a valid sales contract or land contract, and an instrument that conveys ownership of real property
Legal title
The interested buyer has the property once they close on it, and it belongs to them.
Voidable by the injured party is
A contract signed under force
Equitable
The type of title the buyer receives after a contract has been excepted but has not closed
The offeror is who?
The person who is making the offer
Who is the offeree?
The person who receives the offer
Earnest money is also known as
Love and affection
Contracts, to be binding between two people, I must have this
Meeting of the minds
If the seller defaults the term used to cancel the contract is what?
Rescind
A contract is completely perform with all terms of the contract are carried out. The contract is breached, or broken, when one of the parties defaults:
If the seller defaults the term used is rescind - to cancel. If this occurs the buyer might;
Buyer may cancel the contract and recover the earnest money
Buyer may file for a suit for specific performance to force the seller to convey the property
Buyer may sue the seller for compensatory damages
If the buyer defaults, called rescission:
Seller made it clear the contract forfeited but seller usually has the right to retain the earnest money
They can also sue for liquidated damages. The amount of money agreed-upon as settlement if one party doesn’t live up to the terms of the contract
Seller may rescind The contract and return all payments made by the buyer
Seller may file for suit for specific performance
Seller may sue for compensatory damages
Rescission
If the buyer defaults on a contract
Rescind
If the seller defaults on a contract
Suit for specific performance
In certain cases the court may direct the party in terms of the contract to actually carry out the promise, exactly according to the terms of the contract. This is called specific performance of the contract
Examples of real estate contracts are
Listing agreements; between the broker and seller\landlords
Property management agreements; between the broker and principal
Sales contract; between buyers and sellers
Buyers agency agreement; between the broker and buyer
Options; between seller(optionor) & buyer(optionee)
Lease; between tenant\landlord or tenant\property manager
Counter offer
And is the first offer
No contract comes into existence and less the regional offer except your new
offer.
Roles often change… The Original offeror becomes the offeree and the offeree becomes the offeror.
