Unit 1- Contract Law Overview Flashcards
Those who enter a contract and fail to perform
Default or breach
So minor that it could be disregarded
De minimis
Refraining from taking action
Forbearance
6 elements of a valid real estate contract include the following:
- competent parties
- consideration
- mutual agreement
- lawful objective
- in writing and signed by the parties
- contain a legal description
A party who does not have legal capacity
Incompetent party
A person must have attained the age of majority, which is 18 in Texas. A sane person, and sober.
Competent party
A legally competent and neutral party who is authorized by another act in that individual’S place a fiduciary
Attorney-in-fact
A legal relationship between two persons who agree that one party will act on behalf of the other party, subject to the principal’s direction and control
Fiduciary
Something of value given by one party in exchange for something of value from another, money for a promise, money for money, a promise for a promise.
Consideration
The initial and additional cash deposits tendered by the prospective buyer of real property to show good faith.
Earnest money
Non - performance of the legal terms of a valid contract.
Breach of contract
Monies paid to a nondefaulting party under the terms of a contract as opposed to money damages, which are determined and awarded a by court. Paid when a default occurs.
Liquidated damages
In this contract the property owner gives a promise and the purchaser gives money to purchase a legal right and to create the agreement. A right that obligates the seller to sell but gives the buyer unrestricted right to proceed or terminate within a defined time frame and at an agreed - upon price. To be valid in texas, the buyer must deliver valuable consideration (money) to the seller and time is of the essence.
Option contract
$10 was added as an option contract fee. To pay for a multi-thousand-dollar real estate transaction because the other party failed to make a $10 payment. Have your client talk to an attorney and refer to this case where similar language is used.
Joppich case
The parties must enter the contract freely and voluntarily. Their decisions must be based on truthful accurate information. A meeting of the minds between parties to a contract when no fraud, misrepresentation, or undue influence has been present in the negotiations.
Mutual agreement
Another word for mutual agreement.
Mutual assent
The presence of false information. An act of deceit intended to cause someone to part with money or enter into a contract that the person would not have entered into if the decision had been based on truth and accurate information.
Fraud
A lawful purpose. Concerns the provisions of an agreement, which must call for lawful activity.
Lawful objective
There is a specific law in many States (Texas included) requiring areal estate commission agreement to be in writing to be enforceable, so, the oral agreement to pay a commission is not enforceable. True or false
True
A state law that requires certain documents and agreements be reduced to writing to be enforceable in a court of law
Statute of frauds
A property description that is of such certainty and accuracy that one can go to it and identify it; a description that is acceptable to the courts; a reference to a recorded plat or a metes and bounds description.
Legal description
An agreement that meets all the legal requirements of a contract.
Valid
The absence of something. No contract can be created.
Void
A contract that was valid buts for a variety of possible reasons, may no longer be enforced.
Unenforceable
A contract that may be set aside at the sole option of one of the contracting parties.
Voidable
An agreement that meets all the legal requirements to create a binding contract.
Enforceable contract
A contract that is in the process of being performed.
Executory contract
A contract that has been fully performed. Also used to identify the effective date of the contract when all parties have signed and the offerer has been notified of the acceptance of the offer.
Executed contract
A contractual agreement in which each party agrees to perform or forbear in exchange for the other party’s promise to perform or forebear.
Bilateral contracts
A contract that requires one party to complete a performance before the other party is obligated to act for example, a seller is not obligated to pay a brokerage fee until the agent produces a ready, willing i and able buyer.
Unilateral contracts
A fair length of time, as determined by the court, for the performance of contractual obligations.
Reasonable time
The contracting parties agree that strict adherence to the time frames recited in the contract is an essential part of their agreement.
Time is of the essence
A unilateral agreement that binds the property owner and prevents the property owner from selling the property to another party but does not bind the prospective purchaser to purchase.
Option to purchase
A unilateral agreement that binds the property owner to release the prospective purchaser from all obligations if the buyer elects to walk away during the defined option period.
Option to terminate
A bilateral agreement that defines what the tenant may and may not do during term of the leasehold, and what the property owner may and may not do during the term of the leasehold.
Lease
Either a unilateral agreement or a bilateral agreement, though most listing agreements are for an exclusive right-to-sell agency and involve an exchange of promises and obligations (
(only a non exclusive or open listing may be a unilateral agreement. )
Listing agreement
A bilateral agreement that defines the working relationship between a buyer and the buyer’s agent, and creates an exclusive agency relationship.
Buyer representation agreement
Always a bilateral agreement that calls for each of the parties to perform certain actions and/ or fulfill certain promises defined in the agreement
Purchase agreement
Bilateral agreement that defines the working relationship between salesperson and sponsoring broker.
Independent contractor agreement
A fair length of time, as determined by the court, for the performance of contractual obligations.
Reasonable time
In the TREC-promulgated contract forms, the counting of days is from the day after the date of signing or execution and does not include the day the document is signed.
After
A revision or change to a contract; the trec contracts may be amended by using the trec- promulgated amendment.
Amendmet
An addition to a contract; the contract must reference the addendum, and the addendum must reference the contract, listed in paragraph 22 of the trec- promulgated contracts.
Addendum
A contractual agreement or promise to do a particular act.
Performance
The transfer of one’s legal rights to another party.
Assignment
The substitution of a new contract for an existing one or the substitution of a new party to an existing obligation.
Novation
Time limited by every state doing which parties to a contract may bring legal suit to enforce their rights.
Statute of limitations
The practice of one party canceling or terminating a contract, which has the effect of returning the parties to their original positions before the contract was made.
Rescission
What does TREC mean?
The Real Estate Commision
