Principles 7

Question 1

Contract

Answer 1

Is a written or an oral agreement (promise) made by one person to another to do something or to refrain from doing something.

Question 2

Party

Answer 2

A person who takes part in a contract

Question 3

Contractual obligation

Answer 3

The promise each party makes

Question 4

Tender

Answer 4

An offer to perform a contract obligation

Question 5

Executory Contract

Answer 5

When some future contract obligation is yet to be performed.

Question 6

Executed contract

Answer 6

When all of the contract obligations have been performed, the transaction is completed.

Question 7

Express contract

Answer 7

Is a contract of words established by an oral or a written agreement in which the parties declare their intention to make a contract.

Question 8

Implied contract

Answer 8

Is established by the conduct of the parties, without a specific oral or written agreement.

Question 9

Bilateral Contract

Answer 9

Both parties make a promise to do something or to refrain from doing something and both are obligated to perform.

Question 10

Unilateral Contract

Answer 10

Only one party promises, and only that party is obligated to perform.

Question 11

Valid contract requires these

Answer 11

• Parties must have the legal capacity to enter into a contract
• There must be an offer by one party and an acceptance of the other party
• There must be a lawful object to the contract
• Must be some form of consideration, or payment, supporting the contract.
• The Contract may have to be written

Question 12

Void contract

Answer 12

• is one that has no legal effect from its inception

- agreement to do something illegal is VOID

Question 13

Voidable Contract

Answer 13

• May be disavowed by one or both parties, depending on the circumstances
• ex: a voidable Contract is one that someone signs while intoxicated.

Question 14

Unenforceable Contract

Answer 14

-is one signed under duress, such as the threat of physical or economic harm.

Question 15

Legal capacity

Answer 15

They must have the legal ability( an adult, emancipated minor, and mentally competent) to make a contract.

Question 16

Emancipated minor

Answer 16

• Can contract as an adult
• A minor becomes emancipated by marrying, joining the armed forces, or petitioning the court, which may approve the petition.

Question 17

Constructive Fraud

Answer 17

Is a misrepresentation made without fraudulent intent, that is, deliberate intent to deceive.

Question 18

Negligent misrepresentation

Answer 18

-is not made with criminal intent to deceive. It is the result of carelessness.

Question 19

Consideration

Answer 19

Can be a promise to do something (or refrain from doing something) in the future.

Question 20

Discharged Contract

Answer 20

A contract that is terminated

Question 21

Rescission

Answer 21

A process where both parties agree to take back the contract

Question 22

Reformation

Answer 22

• a matter of redrafting the contract or amending the escrow instructions.

Question 23

Breach of contract

Answer 23

-occurs when one of the parties fails to perform all or part of the obligations required by the contract.

Question 24

Statute of limitations

Answer 24

Law that stipulates the specific time period during which a legal action must be brought following the act that gives rise to it.

Question 25

Option

Answer 25

The right to buy property at some time in the future at an agreed-on price