UNIT 4 - CONTRACTS: THE BASICS

Question 1

express contracts

Answer 1

parties declare the terms and put their intentions in words, either oral or written (e.g. rental/ease)

Question 2

implied contract

Answer 2

agreement is shown by act and conduct rather than words. (i.e. when we order food from a restaurant. by showing desire to use a service, we imply that we will pay for it)

Question 3

bilateral contract

Answer 3

each person promises to perform an act in exchange for another person’s promise to perform

Question 4

unilateral contract

Answer 4

a party promises to perform without expectation of performance by another party.

Question 5

executory contract

Answer 5

something remains to be performed by one or both parties

Question 6

executed contract

Answer 6

all parties have performed completely

Question 7

four requirements for valid contract

Answer 7

1. legally competent parties
2. mutual consent between all parties
3. lawful objective
4. sufficient consideration

Question 8

legal capacity

Answer 8

at least 18 years old, unless married, in the military, or declared emancipated by the court

Question 9

hold harmless clause

Answer 9

protects the broker from incorrect information (from innocent misrepresentation)

Question 10

duress

Answer 10

use of force (menace)

Question 11

forbearance

Answer 11

forgiving a debt or obligation

Question 12

statue of frauds

Answer 12

in california, the statue of frauds requires that certain contracts be in writing to prevent fraud in the sale of land or an interest in land.

• sale of real property
• an agreement that cannot be performed within a year from its making (e.g. lease for longer than one year)
• an agreement to employ an agent, broker, or other person to purchase or sell
• an agreement by a purchaser of real property to pay an indebtedness secured by a mortgage or dead of trust.

Question 13

parol evidence rule

Answer 13

when two parties make oral promises to each other, and then write and sign a contract promising something different, the written contract will be considered the valid one.

Question 14

determining conflicts in a contract

Answer 14

1. handwritten content
2. typewritten content
3. attached addenda
4. preprinted material

Question 15

tender of performance

Answer 15

an offer by one of the parties to carry out his or her part of the contract

Question 16

waiver

Answer 16

relinquishment or refusal to accept a right

Question 17

novation

Answer 17

substitution by agreement, of a new obligation for an existing one.

Question 18

unilateral rescission

Answer 18

restoring to the other party everything of value received, on condition that the other party shall do the same.

Question 19

discharge of contracts

Answer 19

1. full performance
2. release
3. assignment
4. novation
5. breach of contract

Question 20

consideration

Answer 20

something of value - such as money, a promise, property, or personal services

Question 21

tender

Answer 21

an offer by one of the parties to carry out his or her part of the contract

Question 22

lawful objective

Answer 22

a contract requiring the performance of an illegal act would not be valid