law of contracts Flashcards
_____________ is a law handed down by the legislature,
Statutory law
____________ law handed down by the courts or regulatory law from the executive branch
common
Many times the law does not speak to specific situations. When this occurs, the case can be
referred to a court.
Decisions by the courts can sometimes help to interpret some laws and their applications. When this happens, they are called
precedents
can be cited by others in future decisions.
precedents
An ___________ agreement is one that is between two or more parties, usually written and enforceable by law.
expressed
An agreement created by the actions of the parties involved but it is not written or spoken. Sometimes it is not intended or known by the parties who created it.
IMPLIED:
Sometimes called a “promise for a promise”, a____________ is one in which both parties are obligated to perform.
bi-lateral contract
An example of a bi-lateral contract would be
a contract to purchase real estate.
A _______________ contract is one in which only one party is obligated to perform.
unilateral
An example would be if the seller promises to pay the broker a bonus if the broker produces a full price offer in 30 days. If the broker produces, the seller would be obligated to pay, however, the broker is not under any obligation to perform.
unilateral contract
An _____________ contract is one in which all parties have agreed in writing. This contract has been signed by the appropriate parties, all changes have been initialed and notice has been given to all parties, in writing, that the contract is _______________.
executed
executed
In an executed contract, the contract does not have to be delivered in writing to the other party, only ________________________
written notice that it is executed.
EXECUTORY:
A contract that has some unfinished details. This can fall into two categories:
When a “One to Four Family Residential Resale Contract” is agreed to and properly executed by all parties, it will enter into the “Executory Stage”.
A Lease Purchase, Lease Option or Contract for Deed is considered to be an executory contract.
Any contract that has a closing day longer than 180 days from the “executed date” will fall into this category.
If a written contract conflicts with an oral contract, the ___________ will prevail in court.
written contract
A valid contract is one which is binding and enforceable on both parties. It must be entered into as a free and voluntary act of each party. In addition, it includes all the essential elements of a contract. In Texas, they are:
- Identification of the parties. These parties must be competent. 2. Offer and acceptance
- Consideration
- Legality of object, and
- Signatures of the parties.
In a TREC One-to-Four Family sales contract, in order for the contract to be valid, it must include:
- Legal Description
- Names of the parties and
- Sales Price
VOID:
One that has no legal force or effect because one or more of the essential elements is absent. If the contract is for an illegal purpose, it is missing one of the elements of a valid contract and is considered _________.
Void
A ___________ contract is one that is binding upon one party but not the other.
voidable
For example, a contract with a minor would be voidable at the option of the minor, while legally enforceable on the other non-minor party.
If ______________ can be proved, that contact can be voidable.
duress, fraud or misrepresentation
An _________________ contract has all of the elements of a valid contract; however, neither party can sue the other to force performance.
unenforceable
When the contract was negotiated, the property was in good condition. However, due to acts of nature, it was destroyed before closing. The seller could not sue the buyer to perform even though all “elements” of the contract were ‘valid’.
Example: of an
unenforceable contract
In some cases, a __________________ of a party can make the contract an unenforceable contract. This is true in both sales and listing contracts.
death or incapacity
An oral contract to lease real estate for a four year period is ____________________
unenforceable
A seller or a seller’s agent has a duty to disclose which of the following?
A) a suicide on the property
B) the death on the property by natural causes
C) an owner or previous owner had a HIV illness
D a material fact
D a material fact
As per the terms of the Residential Listing Agreement, the broker is NOT entitled to a commission for all of the following reasons EXCEPT
A) the seller cannot deliver a deed or the title policy as required by the contract
B) the property is foreclosed upon
C) the broker puts the property in the Multiple Listing Service system
D) property cannot sell as a result of a casualty loss that is not restored by the seller
C) the broker puts the property in the Multiple Listing Service system
Whose signature is required on the deed to transfer ownership? A) Trustee B) Grantee C) Grantor D) all of the above
C) Grantor
A novation is BEST defined as
A) the substitution of one party for another in a contract wherein both the original parties remain liable
B) substitution of a new contract for an existing agreement with the intent of extinguishing the old contract
C) the same as an assignment
D) means of acquiring title by adverse possession
B) substitution of a new contract for an existing agreement with the intent of extinguishing the old contract
The buyer as well as the seller must initial each page of the Residential Listing Agreement.
Choose one answer.
A) True
B) False
B) False
Which of the following actions might leave a licensee open to a charge of practicing law without a license?
Choose one answer.
A) licensee advises the seller that the property probably won’t sell because its overpriced
B) licensee advises the buyer that a title policy should be obtained as well as a survey
C) licensee advises both the seller and the buyer that, in his opinion, title to the subject property is encumbered
D) licensee adds factual statements and business details to a promulgated form as requested by the client
C) licensee advises both the seller and the buyer that, in his opinion, title to the subject property is encumbered
The owner affirms that he owns the property and that there are no defects in title that occurred while he held ownership is what kind of deed. Choose one answer. A) Special Warranty Deed B) General Warranty Deed C) Quit Claim Deed D) Sheriff's Deed
A) Special Warranty Deed
This document states that the seller does indeed have possession of the property and has the right to sell it. Choose one answer. A) fee simple clause B) habendum clause C) covenant of seisen D) deed of trust
C) covenant of seisen
Jointly agreeing to provide a legal debt or obligation for a previous one is called Choose one answer. A) Novation B) Substitution C) Assignment D) Transfer
A) Novation
During the period after a real estate sales contract is signed, but before title actually passes, the status of the contract is: Choose one answer. A) executed B) executor C) unilateral D) implied
B) executor
Under the statute of frauds, contracts for the sale of real estate must be in writing to be enforceable.
Choose one answer.
A) True
B) False
A) True
The Seller’s Disclosure Notice is part of:
Choose one answer.
A) Texas Property Code
B) closing documents from the title company
C) the paperwork the lender will require D) none of the above
A) Texas Property Code
This document is designed for the transfer of personal property. Choose one answer. A) Deed B) Bill of Sale C) Deed of Trust D) General Warranty Deed
B) Bill of Sale
Once a seller receives an offer: Value Score
Choose one answer.
A) the seller has no requirment to respond
B) the seller has to wait until all offers have been presented before making a decision
C) the seller has to counter the first offer received before moving to the next
D) the seller may counter all of the offers to see which one will accept his terms
A) the seller has no requirment to respond
Steering or (channeling) is directing a minority to or away from an area to maintain or change the character of the neighborhood. An agent is not allowed to steer even if the client ask the agent to steer.
Choose one answer.
A) True
B) False
A) True
The Deceptive Trade Practices Act does not require the presence of fraud to be proved; an innocent misrepresentation is actionable.
Choose one answer.
A) True
B) False
A) True
A buyer makes an offer to purchase a property and specifies that the owner accept or reject the offer within 48 hours. Before hearing back from the owner, the buyer locates a more attractive property and withdraws the offer. Is the buyer legally entitled to withdraw the offer?
Choose one answer.
A) Yes, either party may withdraw an offer or counteroffer at any time prior to its acceptance
B) No, the offer is binding until the 48-hour time period expires.
C) Yes, an offer with a condition to respond in 48 hours is not valid.
D) No, the owner must be allowed an opportunity to respond to the offer.
A) Yes, either party may withdraw an offer or counteroffer at any time prior to its acceptance
Certain elements must be present in the TREC One-to Four Family Residential Sales Contract if the contract is to be valid. Which of the following elements is NOT necessary? Choose one answer. A) legal description B) sales price C) names of the parties D) type of deed
D) type of deed
What do you call a deliberate act of deception for the purpose of inducing another to part with something of value or to enter into a contract? Choose one answer. A) innocent misrepresentation B) duress C) mistake D) fraud
D) fraud
When you assign a contract, you are transferring Choose one answer. A) Benefits and obligations B) Ownership and deed C) Deed and deed of trust D) Title and disclosures
A) Benefits and obligations
Who drafts and revises the promulgated sales contracts?
Choose one answer.
A) the Standards and Practices Committee
B) the Texas Real Estate Commissioners
C) the Broker-Lawyer Committee
D) the Justice Department
C) the Broker-Lawyer Committee
The clause in the deed that begins with, “To have and to hold…”, is called Choose one answer. A) Habendum Clause B) Covenant of Seisen C) Conveyance Clause D) Acceleration Clause
A) Habendum Clause
