PSI Exam Prep: Contracts Flashcards
it requires that certain types of contracts, such as for a property ownership transfer, be in writing to be legally enforceable and to prevent injury from fraudulent conduct.
The statute of frauds
What are the 5 characteristics that make a contract valid?
Offer and acceptance Consideration Legally competent parties Legal purpose Made voluntarily
this occurs when the parties enter into an agreement voluntarily with full understanding of contract terms.
Offer and acceptance
it is something of legal value offered by one party and accepted by another,
Consideration
are those who have the legal and mental capacity to enter into a contract
Legally competent parties
it means that the contract results in a legal outcome.
Legal purpose
it means the parties entered into the agreement voluntarily.
A voluntary contract or made voluntary
it means that one part or section of a contract is unenforceable, while the rest of the contract is enforceable
Severability
When one party of the contract decides to terminate it
unilateral rescission
seeking monetary compensation to make up for any harm caused.
sue for damages
it seeks to force a party to make good on the promises made in some way.
specific performance
limits buyer damages to a return of the earnest money if the seller breaches the contract.
liquidated damages
All of the contract obligations have been met
Contract discharge
generally means that one of the parties ends the contract before it’s fully performed
Contract termination
generally results from an operation of law, such as breach of contract, destruction of the object of the contract, etc.
Contract rescission (cancellation)
it means to transfer contractual rights or duties to a new party. The original party is usually liable if the new party do not meet the contract obligations
Assignment
it occurs when one contract or party(ies) is substituted for another.
Novation
UETA stands for
Uniform Electronic Transactions Act
it means that both parties faithfully agree to perform responsibilities within the time limits of the contract.
“Time is of the essence”
it specifies that any dispute arising under the contract shall be determined in accordance with the law in a particular jurisdiction.
Choice of law
means one or both parties commit to compensate the other for any harm, liability, or loss arising out of the contract.
Indemnification
it define a condition or action that a party must meet in order to not be in breach of contract.
Contingency clauses
it is an addition to an existing document, such as an offer to purchase. It adds terms not addressed in the main body of the contract form.
addendum
is a change to an existing contract between parties. It changes one or more of the original contract terms. For example, if the closing date must be changed, or the buyer decides she wants the curtains to remain and the seller agrees (after the original contract noted the seller was taking them), the parties can execute an amendment outlining the additional agreement between them.
amendment
When does a contract becomes binding?
once it is signed
If there is not a specific date in the contract, it should be done….
within “reasonable time”. Usually courts favor the buyers
“I will pay x price for this home, but if the seller receives another offer that’s higher than mine, I’m willing to increase my offer to y price.”
An escalator offer
Should licensees present all of the offers even after an offer has been accepted?
Yes, all of them need to be presented
Which contingency is the riskiest of them all?
Home sale contingency
Who decides how much is for the earneast money?
Usually, the buyer
it occurs when all parties have signed a given contract
Acceptance
it occurs when the accepted offer is delivered.
Binding acceptance
it is a contractual shift of liability and obligations off of a given party.
indemnification clause
it states the time frame in which a party can file a lawsuit relative to the contract.
The statute of limitations
specifies that any contract disputes will be settled through this means, rather than through the court system.
Arbitration Clause
What’s the role of the mortgage contingency in a sales contract?
Document the type of and timeline for financing, and outlines what to do if financing falls through.
