Section 2: Chapter 1: Real Estate Contract Law Flashcards
Legally enforcable agreement between 2 competent parties who agree to perform or refrain from performing certain acts for considerations. “Meeting of the minds”
Contract
What are the 5 elements of the contract?
- Legally competent parties
- Clearly identified property description
- Meeting of the minds as essential terms
- Consideration
- Legal purpose
A contract is void if:
both parties do not have legal capacity to enter into agreement
A contract can be voidable if:
by a minor, limited capacity
True or False: A minor can enter a contract however contract is not enforced against the minor unless it is neccessites such as food or clothing
True
What should contain the legal description of the property (address)?
Deeds and mortgages
True or False: Poorly drafted contracts or contracts that leave something to subsequent agreement often lead to litigation, and they can be judged to be part of the preliminary negotiations rather than contract itself
True
What is true of offers? What is the process of offers?
- An offerer may withdraw offer @ anytime prior to acceptance by the offeree
- If offeree rejects offer, than makes a counteroffer, the roles are reversed and previous offeree now becomes offerer with respect to new offer
How can an offer be terminated?
- Acceptance
- Revocation by offeror caused by the offerors withdrawl prior to acceptance
- Rejection by offeree
- Counteroffer, in which case offeree becomes new offeror
- Lapse of time when the offered has set a deadline for acceptance
- Death or insanity of either party prior to acceptance
What are the 2 types of consideration?
- Valuable
2. Good
What is valuable consideration?
Usually consists of $$ or property but may also be an enforceable promise
What is good consideration?
Gift deed, frequently love and affection
Which type of contract is binding on all parties and has all 5 contract essentials, and is enforceable in court?
Valid Contract
Which type of contract lacks one or more of the 5 essentials missing, thus has no legal force or binding affect?
Void Contract
What type of contract appears valid on paper, but is subject to rescission by one of its parties (not void but capable of being voided by one of the parties)?
Voidable Contract
If a minor enters into a contract, the minor may avoid buying a car bc he is not a competent legal party before the law, what type of contract is this?
Voidable contract on behalf of minor
Any form of deceit by which one party intentionally attempts to gain unfair advantage over another
Fraud
Is a contract Valid, Void or Voidable if a party to a contract is induced to sign bc of fraud statements/facts?
Voidable by injured party
A false statement or concealment of a material fact
Misrepresentation
Harmless statement of exaggeration that a reasonable person would be able to recognize. Does not constitue misrepresentation
Puffing
What are laws that require certain contracts must be in writing to be enforced?
Statue of Frauds
True or False: All RE leases for more than 1 year must be in writing and signed to be enforced in a court of law
TRUE
Parole EVidence Rule would prevent oral agreements from overriding written contract. True or False
True
What are state laws that perscribe time limits on legal actions, meaning lawsuits must be started within a specified period of time. After time limit expires, the claim is outlawed and may not be enforced by court
Statue of Limitations
True or False: RE Contracts do not survive the death of parties
FALSE- they do survive the death of parties
What are the ways to terminate a contract?
- Performance
- Abandonment by one or both parties
- Lapse of time
- Revocation by a party legally entitle to revoke
- Breach by one party, giving the other party the right to terminate
- Recission by a purchased if excercised during legally allowed time frame
A legal remedy that terminates the contract and returns parties to their original positions and is not necessary to prove that money damages were suffered in order to rescind a contract.
Rescission
What guarantees a rescission period
Federal Truth in Lending
What type of contract is one in which all terms and conditions are mentioned and agreed to in writing, orally or both?
Express Contract
What type of contract is one in which certain terms have not been expressly stated but they can be inferred from the nature of the transaction or conduct of parties?
Implied Contract
When one party obligates to perform without receiving a promise of performance from another party. No real contract until second party decides to perform.
Unilateral Contract
When both parties make promises are performed
Bilateral Contract
What type of contract is it when one or both parties has not yet performed?
Executory Contract
What type of contract is it when there is nothing left to be done by either party?
Executed Contract
Unconditional promises intended as binding. “Promise, agree, undertake, and pledge”
Covenant
Something that is established or is agreed upon, as a prerequisite to the doing or taking effect of something else
Condition
The substitution of a new legal obligation for an old one, such as substitution of new contract, or a new debtor/creditor
Novation
If specific times have not been stated for performance, the law will imply that a reasonable time was met
Question of time
Transfer of the right, title or interest of one person to another.
Assignment
Legal written document in which one person appoints another to be his attorney in fact and authorized him to act on his behalf
Power of Attorney
Who may buy or sell a piece of real property for another without a RE licenses, provided the person is not actually engaged in a brokerage biz?
Attorney in fact
True or False: death of either party automatically revokes a Power of Attorney since it is a personal authorization
True
Legal doctrine that stops/prevents a person from asserting certain rights, or stating certain facts if such action is judged to be inconsistent with or contrary to a previous position
Estoppel
Legal doctrine that clarifies the exact amount of debt owed by one person to another party and/or situations between parties as a certain, specified debt
Estoppel Certificate
