Unit 11 - Real Estate Contracts Flashcards
What is a contract
A voluntary promise between two competent parties to perform (or not perform) some legal act in exchange for consideration
What are the 5 things a contract must be
Voluntary, An agreement or a promise, made by legally competent parties, supported by lawful consideration, for a legal act
What is an express contract
Parties state the terms and show their intentions in words, either oral or written.
What is an Implied contract
agreement of the parties is demonstrated by their acts and conduct
What is a bilateral contract
both parties promise to do something; one promise is given in exchange for another
What is a unilateral contract
A one-sided agreement; one party makes a promise in order to entice a second party to do something. First party (seller) is legally obligated
What is an executed contract
one in which all parties have fulfilled their promieses; the contract has been performed
What is an Executory contract
when one or both parties still have an act to perform. (a sales contract from time it is signed until closing)
What 5 requirements create a valid contract
Offer and acceptance
Consideration
Legally competent parties
Consent
Legal Purpose
What is revocation
the offeror revokes the offer before offeree’s acceptance
What is Consideration
something of legal value offered by one party and accepted by another. Must be good and valuable between parties
A contract can be described in what 4 ways
Valid: has all the legal elements
Void: Lacks one or more elements and has no legal force or effect
Voidable: has all legal elements on its face, but it may be rescinded or
disaffirmed
Unenforceable: appears to ahve all legal elements but cannot be
enforced in court. (Still valid between parties)
When is a contract discharged
when the agreement is terminated. Either completely performed/fulfilled, or for another reason, sucha s breach or default.
What does “time is of the essence” mean
each element of contract must be performed within a certain time. No specific deadline; should be performed within a reasonable time
What is Assignment
refers to a transfer of rights or duties under a contract. Substitution of parties
What is a Novation
Substitution of a new contract for an existing contract. (Multiple courteroffers, just create new contract with final offers)
What is suite for specific performance
seller breaches real estate sales contract, buyer sues. Ask court to force seller to go through with the sale. May sue for damages for any costs of hardship suffered.
What are liquidated damages clause
specifies the amount of money to which the seller is entitled if the buyer breaches the contract. (Usually earnest money)
What is partial performance of the terms along with written acceptance
Parties agree work performed is close enough to completion
What is substantial performance
one party has substantially performed on the contract but does not complete all the details exactly as the contract requires.
What is Impossibility of performance
unforeseen circumstance has made an act requried by the contract impossible or impracticable
What is Rescission
returns the parties to their original positions before the contract, so any monies or porperty exchanged must be returned.
What is a counteroffer
a new offer, it rejects the original offer
What is a Binder or Letter of Intent (LOI)
in a complex, usually commerical, transaction, a buyer’s offer my be presented in a shorter document instead of a complete sales contract. (bullet points)
