Unit 10 Flashcards
What is a contract?
In the simplest terms, a contract is the intangible agreement that was made in “the meeting of the minds” of the parties to the contract.
John Junior, age 14, under duress from his father, signs a contract to buy a $75,000 sports car from his father, John Senior, for $10 a week plus a promise to “be a good boy” around the house, even though both father and son know that Junior intends to drive the car without license or insurance. Do you think a court would enforce this contract if either party decided not to go through with it?
A court might declare the contract void, voidable, or simply not a valid contract because: Junior is a minor; the consideration is grossly insufficient or not clearly defined; Junior’s signing is not entirely voluntary, nor is consent truly mutual; the purpose of the contract may not be legal, since Junior cannot legally operate the car, although it may be legal for him to own it.
The Statute of Frauds requires that most contracts that convey an interest in real estate be in writing. What does it mean to say under this doctrine that an oral contract may be valid, but not enforceable?
An oral contract to convey an interest may meet the five conditions for validity, but a court will not order a defaulting party to perform. However, if the parties do perform, the contract is executed and cannot be rescinded under the Statute of Frauds.
What happens to an offer made to a seller if the seller changes one of the terms, signs the offer, and returns it to the buyer?
The original offer becomes void. The changed offer is a new offer, or counteroffer, from the seller to the buyer.
When does an offer or counteroffer become a contract?
When the parties, purpose, consideration, and good faith requirements have been met and the offeree communicates acceptance to the offeror without changing the offer in any way.
What is the relationship between an executory contract and an executed contract?
An executory contract is waiting to be performed; once it has been performed, it is an executed contract.
Describe the legal remedies a damaged party has when another party to a contract breaches the contract.
Rescission - cancel the contract and return all monies.
Forfeiture - the breaching party has to give up something.
Suit for damages - the breaching party is required by a court to pay an amount specified in the contract (liquidated damages) or an amount determined in the suit (unliquidated damages).
Suit for specific performance - the breaching party is required by a court to go through with the contract.
A valid ____ is one that is legally enforceable by virtue of meeting certain requirements of contract law.
contract
Valid
enforceable within a statutory time period
Valid but unenforceable
some contracts are enforceable only if they are in writing.
Void
does not meet the tests for validity, and therefore is no contract at all.
Voidable
subject to rescission by a party to the contract who is deemed to have acted under some kind of disability.
Competent parties
capacity to contract is determined by legal age, mental competency and legitimate authority.
____ _____ requires that a contract involve a clear and definite offer and an intentional, unqualified acceptance of the offer.
Mutual consent
_____________ as compensation for performance by the other party. Good consideration is something of questionable value.
Valuable consideration
Legal purpose
the content, promise, or intent of a contract must be lawful.
Voluntary, good faith act
contract is voidable if one party acted under duress, coercion, fraud, or misrepresentation.
A ____ that conveys an interest in real estate must be in writing, contain a legal description of the property and be signed by one or more of the parties.
contract ;
The _______________ restricts the time period for which an injured party in a contract has the right to rescind or disaffirm the contract.
statute of limitations
The ___________ requires that certain contracts must be in writing to be enforceable. It concerns the enforceability of a contract, not its validity.
statute of frauds
The ______ makes it legal in many states to use electronic signatures in electronic transactions
Uniform electronic transactions act
an ___ expresses the offeror’s intention to enter into a contract with an offer to person the terms of the agreement one exchange for the offer’s performance.
offer
For an _____ to be valid, the offerer must manifestly and unequivocally accept all terms of the offer without change, and so indicate by signing the offer, preferably with a date signing.
acceptance
By changing any terms of an offer, the offeree creates a ____, and the original offer is void.
counteroffer
The ___ extinguishes the offer and the offer’s right to accept it.
revocation
_____ _ _ __ by acceptance, rejection, revocation, lapse of time, counteroffer and death
termination of offer
A real estate contract that is a not personal contract for services can be ___ to another party unless the terms of the agreement specifically prohibit assignment.
assigned
Contract in which all the terms and covenants of the agreement have been manifestly stated and agreed to by all parties.
exxpress contract
this contact is unstated or unintentional agreement that may be deemed to exist when the actions of any of the parties suggest the existence of an agreement
implied contract
this contract is one which both parties promise to perform their respective parts of an agreement in exchange for performance by the other party.
bilateral contract
this contract only one party promises to do something, provided the other party does something
unilateral contract
this contract is one that has been fully performed and fulfilled: neither party bears any further obligation
executed contract
this contract is one which performance is yet to be completed
executory contract
this contract is one that unduly favors the party with superior bargaining power
unconscionable contract
this contract is one dictated by the party who has the greater bargaining advantage
adhesion contract
this contract is one whose effects are triggered by the occurrence of a chance event
aleatory contract
Contract terminiation
1.performance
2. infeasibility
3. mutual agreement
4. cooling-period rescission
5. revocation
6. abandonment
7. lapse of time
8. invalidity of contract
9. operation of law
a _____is a failure to perform according to the terms of the agreement. the damaged party may elect legal remedies such as rescission, forfeiture or suit to damages/specific performance
breach of contract
Which of the following is a legally-required element of a valid and enforceable real estate contract?
Valuable consideration
What is the statute of limitations?
A set period of time during which an injured party can rescind a contract
How much time does a seller have to accept a buyer’s offer if the offer does not have an expiration date?
A “reasonable” time, or until the expiration date on the offer
Once a transaction closes, a contract is said to be
executed
A person sells a summer cottage appraised at $100,000 to a stranger for $50,000. The seller’s family wants to challenge the validity of the sale contract. The most apparent weakness of the contract that they might be able to attack is the
insufficiency of the consideration exchanged for the property.
Parties can agree to replace a cancelled contract with another contract by the process of
novation.
In which circumstances would a buyer most likely sue for specific performance?
The seller backed out of the original sales contract.
Which of the following contracts can be assigned to another party?
A contract for the sale of a house
Which of the following is an executory contract?
A sale contract before closing.
In a suit for damages by reason of default, the damaged party may claim liquidated damages if
the contract stated a specific amount due to a damaged party.
All of the following will terminate a contract EXCEPT
assignment of the contract.
A buyer submits an offer to a seller and then dies in a car accident. Before learning of the buyer’s death, the seller accepts the offer. Which of the following is true?
a)The seller can force the buyer’s estate to go through with the purchase.
b)The buyer’s death terminated the offer.
c)The seller must make a new offer with the same terms to the buyer’s heirs.
d)The buyer’s heirs have the option of enforcing the contract.
b)The buyer’s death terminated the offer.
