Unit 5: How a Contract is Created

Question 1

What is a contract?

Answer 1

A voluntary, binding agreement between two or more competent (18, sane, & sober) parties to do (or not do) a specific thing.

Question 2

What are the 2 types of contracts?

Answer 2

1) Implied

2) Express (declared)

Question 3

T/F There are no implied contracts in transfer of any interest in real estate.

Answer 3

True

Question 4

To be enforceable, how do express contracts need to be made?

Answer 4

In real estate, contracts need to be expressed in a written document.

Question 5

What are the 2 kinds of express contracts?

Answer 5

1) Bilateral

2) Unilateral

Question 6

What is a bilateral contract?

Answer 6

A promise exchanged for a promise.

“I promise to sell and you promise to buy.”

Question 7

What is a unilateral contract?

Answer 7

A promise exchanged for performance. It is an option contract.

“I promise to sell if you decide to buy.”

Question 8

Which type of express contract has only 1 party bound?

Answer 8

Unilateral contract