Level 10 - Basic Contract Law

Question 1

Exclusive Buyer Agency Agreement

Answer 1

an agreement in which the buyer has an exclusive relationship with one broker.

Question 2

Nonexclusive Buyer Agency Agreement

Answer 2

an agreement that gives a specified broker the right to find a property for the buyer and earn a commission, but the buyer also has the right the enter into other nonexclusive agreements with other brokers or even purchase the property directly from the seller without a broker

Question 3

pre-qualification

Answer 3

the process of estimating the maximum loan amount a buyer is likely to be eligible to obtain and the approximate purchase price they can afford.

Question 4

Contract

Answer 4

a legally enforceable and binding agreement between parties wherein promise to do or not do something is given in exchange for valuable consideration.

Question 5

Consideration

Answer 5

something of value exchanged by the parties as evidence of agreement to the terms of a contract.

Question 6

Duress

Answer 6

the unlawful effort, such as threats of physical violence or other pressure, to coerce a party to perform an act.

Question 7

Enforceability

Answer 7

possessing the essential elements necessary to be legally binding and obligate performance; used to describe the compelling nature of a valid contract.

Question 8

Fraud

Answer 8

wrongful or criminal deception intended to result in financial or personal gain.

Question 9

Goodwill

Answer 9

good consideration, such as love and affection, that can be exchanged for valuable consideration in a contract or agreement; the exchange of which is generally seen as a gift on the part of the party giving up the valuable consideration.

Question 10

Mistake

Answer 10

an erroneous impression on the part of one or both parties regarding some material aspect of a contract.

Question 11

Mistake of Law

Answer 11

a mistake which requires that there be a misunderstanding of all parties regarding the understanding or awareness of applicable law.

Question 12

Mutual Assent

Answer 12

the fully agreed-upon exchange of promises by the parties; aka for and acceptance.

Question 13

Null and Void

Answer 13

lacking legal or binding force; invalid

Question 14

Offer

Answer 14

a proposition made by an offered to an offer to agree to the terms of a binding contract; becomes a contract upon acceptance.

Question 15

Parol Evidence Rule

Answer 15

legal concept with dictates that oral evidence can be used to support a written contract but cannot be used to contradict one.

Question 15

Status of Frauds

Answer 15

a law that requires certain types of contracts, including those conveying interest in real property, to be in writing to be enforceable.

Question 16

Status of Limitations

Answer 16

a legal concept that establishes time limits for bringing certain kinds of legal actions

Question 17

Undue Influence

Answer 17

the act of persuading another’s decisions due to the relationship between the two parties

Question 18

Valid Contract

Answer 18

a contract possessing the essential elements necessary to be legally binding and obligate performance; is binding and enforceable on both parties.

Question 19

Void

Answer 19

lacking legal or binding force; used to describe a contract that is either illegal or impossible to complete

Question 20

Void Contract

Answer 20

a contract lacking legal or binding force; often used with a phrase “null and void”

Question 21

Voidable Contract

Answer 21

a contract wherein the wronged party has the option to perform, enforce, or void the contract.

Question 22

addenda

Answer 22

additions to a completed contract that specify supplementary information to the contract

Question 23

acceptance

Answer 23

an offeree’s agreement to the terms of an offer

Question 24

amendments

Answer 24

the change of existing information to the contract

Question 25

bilateral contract

Answer 25

a contract wherein both parties are obligated to perform in an exchange of promises

Question 26

contingency

Answer 26

a provision within a contract that makes performance conditional upon the occurrence of a stated event

Question 27

counteroffer

Answer 27

a contract proposal submitted in response to a previous offer, modifying the terms of the original offer; considered a rejection of the original offer

Question 28

Executed Contract

Answer 28

a contract in which all terms have been fulfilled by all parties

Question 29

executory contract

Answer 29

a contract that has not yet been fully performed (both sides have not yet completed their obligations)

Question 30

express contract

Answer 30

an oral or written contract ins which the parties explicitly state or express their intentions and their expectations regarding the contract and the exchange of promises.

Question 31

implied contract

Answer 31

a contract created by the actions of the parties rather than by express agreement

Question 32

mailbox rule

Answer 32

legal concept which states that once written acceptance is place in control of the mailing service, and out of the control of the offer, it is considered accepted, not when the acceptance is actually received by the offeror.

Question 33

offeree

Answer 33

party receiving the offer

Question 34

offeror

Answer 34

party making the offer

Question 35

time being of the essence

Answer 35

communicated to parties of a contract that they must perform their contractual duties by a specific date and time in order to avoid a breach of contract

Question 36

with reserve

Answer 36

term used for auctions where seller has the right to stop bidding for any reason

Question 37

without reserve

Answer 37

term used for auctions where seller agrees to accept the highest bid regardless of the bid; aka absolute auction

Question 38

unilateral contract

Answer 38

a contract wherein one party makes a promise and is obligated to perform if a second party choose to accept the offer and perform in exchange for that which was promised.

Question 39

accord and satisfaction

Answer 39

an agreement in which the parties agree to discharge the original contract in favor of a new one, wherein accepted performance is often less than what was initially owed.

Question 40

assignee

Answer 40

person to whom the assignment is made

Question 41

assignment

Answer 41

the transference of rights and obligations in a contract from one party to another

Question 42

assignor

Answer 42

the person assigning a contract

Question 43

compensatory damages

Answer 43

the award given to a wronged party as compensation for actual injury or loss; aka actual damages

Question 44

consequential damages

Answer 44

damages sought as a direct “consequence” of a party’s conduct, or, the breach of contract; aka special damages

Question 45

liquidated damages

Answer 45

damages established by the contract to be paid as compensation in the event of default.

Question 46

novation

Answer 46

a mutual agreement of the parties to replace an existing contract with a new one.

Question 47

release

Answer 47

a mutual agreement of the parties wherein one party frees the other from contractual duties.

Question 48

rescission

Answer 48

an attempt to put the parties back in a position as though the contract never existed; aka annulment

Question 49

specific performance

Answer 49

a legal remedy that requires the party in breach of contract to perform in accordance with the terms of the contract (as opposed to paying damages)