Module 2 Flashcards
______ ____is the body of rules consisting of common law and statutory law that regulate the formation, interpretation, and enforcement of promises.
Contract Law
______ ____ is the term used to define written laws, usually enacted by a legislative body.
Statutory Law
______ ______ ___ is the collection of legal concepts that the colonists brought with them to North America from England.
English common law
United States contract law has its origins in ______ ________ ____.
English Common Law
The basic principles of contract law that apply to today’s real estate brokerage are based upon the concepts that are in …..
Restatements of the Law of Contracts
In real estate brokerage, ______ agreements and ______ agreements are the two most frequently used contracts.
listing
sale
Contract law is made up of both _______ law and ________ law.
common
statutory
Other contracts common to real estate brokerage are …..
options, mortgages, and land sale contracts.
In order for a contract to be valid, these four essential elements are required at the time of its creation:
- competent parties (the parties must be legally competent);
- mutual assent (also known as offer and acceptance);
- consideration (something of value); and
- legality of purpose (lawful object).
Competent parties requires the parties to the contract to be legally competent. Some of the issues involved in this required contract element are:
Age Criminal History (Felonies) Illiteracy Identifiable Parties Mental Capacity Legal Authority
also referred to as a meeting of the minds and sometimes mutual consent.
Mutual assent
_________ _________ is demonstrated by the offeror making the offer and the offeree accepting the offer; it’s a clear and unequivocal offer and acceptance with an underlying meeting of the minds.
Mutual assent
The _________ is the party making the offer, and the _______ is receiving the offer.
Offeror
offeree
to be enforceable in what form must a contract be presented?
written
_______ is a legal concept that applies to the law of contracts. Contracts must be supported by consideration, or the contract will be void.
Consideration
________ must be present in every contract and can be an exchange of money, services, promises, negotiable instruments, personal property, the grants of rights, or the forbearance to act.
Consideration
________ __ ________ means the purpose or object of the contract is legal and enforceable; promise, intent and content must be lawful; if illegal, the contract is void – cannot contract to break the law.
Legality of Purpose
__________ is the contract element that requires the object of the contract to be legal.
Legality of Purpose
If a contract is created for a legal purpose but that purpose then becomes illegal before the contract is carried out what happens to the contract?
the contract becomes void
Contracts are classified as:
Express or Implied
Unilateral or Bilateral
Executed or Executory
An ___________ contract is one having the necessary contract elements (competent parties, mutual assent, consideration, lawful object) explicitly stated by words, either written or oral. _________ contracts are not implied or left to inference due to the circumstances surrounding the creation of the contract.
express
All written contracts are ________ contracts
express
_______ contracts are not created by an oral or written agreement, they must be deduced from the actions of the parties.
implied
In contrast to express contracts, contracts can be created by implication. These contracts are called _______ contracts.
implied
An _________ contract is one expressed by words, either oral or written. An ________ contract is one deduced from the actions of the parties.
express
implied
True or False
The Statute of Frauds requires that all real estate matters be in writing, except a rental of one year or less.
True
Contracts with mutual promises are known as ________
bilateral
An important feature of a ________ contract is that each party can enforce the contract against the other.
bilateral
In real estate brokerage, the most common type of ________ contract is the real estate sale agreement.
bilateral
a ________ contract is one where only one party makes a promise without receiving any promise from the other party to the contract.
unilateral
True or False
A real estate sale agreement is a unilateral contract.
false
A real estate sale agreement is a bilateral contract because the parties exchange mutual promises. In a unilateral contract, only one party makes a promise.
An ________ contract is one that has not yet been fully executed (performed) by the parties.
executory
_________ and ________ refer to the stage of a contract in terms of performance by the parties. Performance refers to the act of doing the things required by a contract.
Executed
Executory
An _________ contract is one that has been fully performed by the contracting parties.
executed
An oral lease for two years is not enforceable because of the ________ of ________
Statute of Frauds.
If a person dies prior to the notification of the acceptance of an offer, the contract is ________
void.
If only one party makes a promise, the contract is _______
unilateral.
The ______ of ______ requires contracts for real estate to be in writing to be enforceable.
Statute of Frauds
Which of the following is NOT a necessary element in the formation of a contract?
Offer
Performance
Consideration
Acceptance
Performance
A felon can do all of the following EXCEPT
vote while incarcerated.
make a will.
buy and sell real property.
marry.
vote
An agreement between competent parties and based upon legal consideration that creates legally enforceable duties and obligations.
what is this statement an example of?
A Contract
Negotiating a contract with a minor can be legally accomplished through the minor’s _______ _______.
legal guardian
SHOULD or SHOULD NOT?
In selling property to a corporation, the seller ________ verify the corporate resolution authorizing specific persons to sign for the corporation.
should
TRUE or FALSE
A contract signed by an obviously intoxicated person can be rescinded.
True
An __________ contract is one that has not yet been fully performed.
executory
CAN or CANNOT?
An offeror _______ revoke an offer after the offeree has communicated that they have accepted it.
cannot
All of the following are essential elements to a lawfully enforceable contract EXCEPT
consideration.
recordation.
legality of object.
legal competency.
recordation
The offeror can withdraw the contract at any time before the offeree’s _________ of the contract is communicated.
acceptance
CAN or CANNOT?
A limited partner of a limited partnership ______ enter into contracts on behalf of another or for the limited partnership. The general partner in the limited partnership is presumed to have the authority to enter into contracts for the partnership.
cannot
Which of the following statements about competent parties is TRUE?
- An individual who is legally drunk has the capacity to sign an agreement to purchase real estate.
- A 17 year old married boy is not considered the age of majority under contract law.
- An illiterate person can enter into a written contract.
- A felon cannot buy real property.
-An illiterate person can enter into a written contract.
TRUE or FALSE
A 17 year old married person in Oregon is legally bound under contract law.
True
Felipe obtained a signed offer and an earnest money check from Jack, a qualified buyer. Before Felipe could present the offer to the seller, Jack called to say that he was being transferred out of town and wanted to withdraw his offer. In this case, the buyer
- is within his right to withdraw his offer.
- must forfeit a part of his earnest money deposit.
- could be successfully sued for specific performance.
- must forfeit his entire earnest money deposit.
is within his right to withdraw his offer.
Which of the following do NOT need to be in writing?
A listing agreement.
A lease for one year or longer.
A rental agreement for less than one year.
An offer to purchase real estate.
A rental agreement for less than one year.
Which is not a requirement of a valid contract?
Offer and acceptance.
Consideration expressed in monetary terms.
Lawful purpose.
Competent parties.
Consideration expressed in monetary terms.
The buyer has the right to withdraw the offer before it is _______ by the seller.
accepted
Consideration does not have to be expressed in ______ terms.
monetary terms
Consideration does not have to be expressed in ______ terms.
monetary terms
A representation that is designed to give a false impression is a _______ _________
false representation.
A licensee who does not disclose knowledge of material facts or defects that could be observed by an ordinary examination of a property is guilty of misrepresentation by ________
Omission
TRUE or FALSE
When a contract is entered into because a party relied on a misrepresentation, the contract is voidable at the option of the party to whom the misrepresentation was made.
True
________ means to give sufficient reason to take legal action.
Actionable
________ means to give sufficient reason to take legal action.
Actionable
Intentional ________ is a purposeful misstatement of a material fact that is designed intentionally to deceive.
Intentional Misrepresentation
Intentional _______ is a purposeful concealment of a material fact.
Intentional Concealment
Negligent ________ is an unintended misstatement that the agent should have known to be a misstatement.
Misrepresentation
Negligent _________ is an unintended omission that the agent should have known not to omit.
Omission
_____ is a licensee boasting about property’s benefits
Puffing
________ is a misstatement or concealment of fact.
Misrepresentation
__________ is the act of hiding something. In general, concealment of a material fact is actionable against the concealing party.
Concealment
________ is the threat of economic or physical harm leading a person to enter into a contract. The threat of harm may be against the contracting party or against a third party.
Duress
________ is the threat of economic or physical harm leading a person to enter into a contract. The threat of harm may be against the contracting party or against a third party.
Duress
________ ________ usually arises when one party can dominate the free will of the other party because of the relationship that exists between them.
Undue influence
________ ________ usually arises when one party can dominate the free will of the other party because of the relationship that exists between them.
Undue influence
A mistake of a material fact by both parties is known as a _______ _________
mutual mistake.
A ______ contract is one that is legally binding and enforceable
valid
An ________ contract is a contract that has not yet been fully carried out because one or both parties still have some contract conditions to perform.
executory
A ______ contract is unenforceable at the time of formation or upon the discovery of a nullity. For example, a contract formed for an illegal purpose is ____ at the time it is formed because contracts must have a legal purpose.
void
True or False
As long as the purpose of a contract is legal at the time of formation, the contract remains valid if the purpose becomes illegal.
False
A contract to perform an act that was legal when formed but then became illegal before it could be performed is a void contract.
True or False
As long as the purpose of a contract is legal at the time of formation, the contract remains valid if the purpose becomes illegal.
False
A contract to perform an act that was legal when formed but then became illegal before it could be performed is a void contract.
Simply put, _____ means if there is a claim, then it must be acted on in a timely manner.
laches
The ________ period in a real estate contract is the period between signing the contract and closing.
executory
