LESSON 3: INTRO TO CONTRACTS Flashcards
What are the three stages of a contract?
Offer, acceptance, and performance.
What does the Statute of Frauds require for real estate contracts?
All real estate contracts must be in writing and signed in order to be enforceable.
What are the five elements of a valid contract?
- Legally competent parties 2. Mutual assent 3. Lawful objective 4. Consideration 5. Contract is in writing
What does mutual assent mean in contract law?
Mutual assent refers to the agreement of all parties that the contract is valid prior to signing, with no fraud, misrepresentation, or duress involved.
What happens if a contract is voidable?
If a contract is voidable, one party may rescind or void the contract. Examples include when a party is a minor or mentally incompetent.
What happens if a contract is void?
A void contract has no legal effect and cannot be enforced because the terms do not create legal rights or call for illegal acts.
What is the difference between fraud and misrepresentation in contracts?
Fraud involves intentional deceit, while misrepresentation involves false information but may not be intentional. Fraud typically causes harm and malice is involved.
What does “competent parties” mean in a contract?
The parties to the contract must be 18 or older, of sound mind, and not intoxicated. If a minor or someone mentally incompetent is involved, the contract may be voidable or void.
What is a power of attorney?
A power of attorney grants someone the authority to act on behalf of another person, known as the principal, for specific actions like managing real estate, banking, or legal decisions.
What is a nondurable power of attorney?
A nondurable power of attorney takes effect immediately and is often used for specific transactions. It remains in effect until revoked or the principal becomes mentally incompetent or passes away.
What is a durable power of attorney?
A durable power of attorney allows the attorney-in-fact to act on behalf of the principal even if the principal becomes mentally or physically incapable. It remains in effect until revoked or the principal dies.
What is a springing power of attorney?
A springing power of attorney becomes effective when a specific event, like mental or physical incapacity, happens to the principal.
What are some factors that make a contract unenforceable?
False information, fraud, misrepresentation, duress, or mistakes in the terms of the contract can make the agreement unenforceable.
What does “mutual assent” involve in a real estate contract?
It requires an offer and acceptance, and no fraud or misrepresentation in the contract. If one party accepts an offer, it indicates mutual assent to the terms of the agreement.
What happens if fraud is involved in a contract?
If fraud is involved, it means one party intentionally deceives the other to gain something valuable. Fraud leads to damages and can make the contract voidable.
Can a contract be enforced with a minor as a party?
A contract with a minor is voidable. The minor may void the contract at any time, and the contract may be ratified when the minor reaches adulthood.
What is Innocent Misrepresentation?
Innocent misrepresentation occurs when wrong information is provided, but it is not done intentionally or for deceiving. It causes another individual to suffer a loss or injury.
What is a Mistake in a contract?
A mistake in contracts occurs when there is an unintentional ambiguity or oversight that affects the agreement. It is an honest misinterpretation of the facts and information provided.
What is Duress in contract law?
Duress in contract law occurs when one party is forced to accept the contract, making it void. For example, blackmail or coercion to change the terms of a contract is duress.
What is meant by Lawful Objective in a contract?
The purpose of the contract must be lawful, meaning that it cannot call for any illegal activities. If the objective is unlawful, the contract is void.
What is Consideration in a contract?
Consideration refers to something of value that each party provides in exchange for something else. Valuable consideration includes money or property, while good consideration could be a gift or a promise for love. It is necessary for a contract to be enforceable.
What is a failure of consideration?
A failure of consideration occurs when one party does not perform their obligation in a contract. For example, if one party does not fulfill their promise, it is considered a failure of consideration.
What is the definition of “Reasonable Time” for depositing money in real estate transactions in Texas?
“Reasonable time” for depositing money in Texas real estate transactions is by the close of business on the second working day after execution of the contract, unless otherwise agreed upon in writing.
What is the Statute of Frauds in contract law?
The Statute of Frauds requires certain contracts, like those related to real estate or leases longer than one year, to be in writing to be enforceable.
What is the Parol Evidence Rule?
The Parol Evidence Rule prohibits someone from changing the terms of a written contract by testifying that the contract does not include all terms or is different from what was agreed.
What does the Statute of Frauds prevent?
The Statute of Frauds prevents fraudulent conduct and ensures that contracts are written to reduce misunderstandings and litigation. It makes it difficult for a nonexistent contract to be enforced.
What is an Express Contract?
An express contract is created when all parties explicitly agree, either orally or in writing, to the terms of the contract. If any party deviates from the terms, the injured party can seek legal recourse.
What is an Implied Contract?
An implied contract is created through the actions or conduct of the parties rather than through written or spoken words. It involves an exchange of promises and is legally binding despite not being explicitly agreed upon.
What is a Unilateral Contract?
A unilateral contract involves a promise made by only one party, with the other party not obligated to act unless certain conditions are met. For example, a reward offer is a unilateral contract.
What is a Bilateral Contract?
A bilateral contract is a mutual agreement where both parties provide consideration and promise to perform certain actions, creating reciprocal obligations.
What is a Valid Contract?
A valid contract is legally enforceable by courts and binds the parties. It must have mutual assent, competent parties, consideration, a lawful objective, and adherence to the statute of frauds, if required.
What is a Void Contract?
A void contract has no legal effect and is considered as if it never existed. It is unenforceable and often arises from illegal activities, fraud, misrepresentation, duress, or undue influence.
What is a Voidable Contract?
A voidable contract is one that at least one party can declare non-binding. It may be voided by an incompetent party or a minor, but can be ratified upon returning to competency.
What is an Unenforceable Contract?
An unenforceable contract was once valid but cannot be legally enforced due to a technicality, such as the statute of limitations or conflicting state legislation.
What is the Statute of Frauds?
The Statute of Frauds requires certain contracts to be written and signed by all parties to be enforceable. It prevents fraud and ensures clarity in agreements.
What is the Statute of Limitations?
It sets a time limit for filing civil lawsuits. For example, in Texas, claims on a returned check must be made within three years.
What is the Doctrine of Laches?
The Doctrine of Laches bars claims when there is an unreasonable delay or negligence in asserting a right. If a party delays too long, they may lose their right to sue.
What is an Example of an Unenforceable Contract?
A verbal agreement for the sale and purchase of a home is unenforceable under the Statute of Frauds because it must be in writing to be valid.
What is an Executory Contract?
An executory contract is one where the performance of one or more parties is incomplete. Example: A lease agreement where obligations continue over time.
What is an Executed Contract?
An executed contract is one that is fully performed at the time of signing. Example: A deed of real property where the obligations are completed when the deed is signed and transferred.
What is Inverse Condemnation?
Inverse condemnation refers to a situation where the government takes private property but fails to pay the just compensation required by law. The owner must sue the government for compensation.
