11 - Contracts

Question 1

Listing Contract

Answer 1

employment contract for professional services negotiated between member of public and real estate broker

Question 2

Purchase and Sale Contract

Answer 2

negotiated between owner of property and potential buyer. specifies terms and conditions in trasnfer of ownership

Question 3

Contract

Answer 3

agreement between 2 or more competent parties that create obligation to do, or not do, a certain thing

can be written or oral

Question 4

Assignment

Answer 4

sale, transfer, or subrogation of rights in a contract

Question 5

Assignee

Answer 5

party who receives the rights in a contract

Question 6

Assignor

Answer 6

party who grants the rights in a contract

not relieved of performance after assignment

if assignee fails to perform, assignor is responsible for performance of contract as originally agreed

Question 7

4 Essential Elements of Valid Contract

Answer 7

Lawful Subject
Offer & Acceptance
Consideration
Competent Parties

Question 8

Lawful Subject

Answer 8

contract must be lawful (legal) and not against public welfare

Question 9

Offer & Acceptance

Answer 9

“meeting of the minds”

Question 10

Consideration

Answer 10

contract must specify “sufficient consideration” (valuable $ or good, which are things not expressed with money)

Question 11

Competent Parties

Answer 11

two or more competent parties

Question 12

Statute of Frauds

Answer 12

enacted 1677 in England

protection against fraud in the sale of real property

requires contract to be in writing for a transfer of a right or interest of land)

Question 13

COLIC

Answer 13

C - competent parties

O - offer and acceptance

L - Lawful subject

I - In writing

C - Consideration

Question 14

Statute of Limitations

Answer 14

time limits for legal action to enforce rights under a contract

Oral - action within 4 years

Written - action brought within 5 years

Question 15

Express Contract

Answer 15

all terms and conditions are specified and agreed to by the parties

complete understanding

can be oral or written

Question 16

Implied Contract

Answer 16

SOME terms and conditions can be assumed by nature of the agreement or words and actions of parties

oral or written

can be an implied provision of another contract

Question 17

Bilateral Contract

Answer 17

both parties mutually agree to be bound to performance of terms/conditions

promise for a promise

Question 18

Unilateral Contract

Answer 18

one party expressly agrees to perform an act. this is the only person bound by terms of contract.

promise in exchange for act

Question 19

Executory Contract

Answer 19

if any term or condition remains to be performed

Question 20

Executed Contract

Answer 20

when all parties have fully performed

Question 21

Formal Contract

Answer 21

written

contains all elements of valid contract

may recorded in public record

enforceable under Statute of Frauds

“wholly written and under seal”

Question 22

Informal (Parol) Contract

Answer 22

oral agreement

may or may not contain elements of valid contract

not enforceable under statute of frauds

Question 23

Void contract

Answer 23

unenforceable

• impossible or illegal
• became illegal due to changes in laws
• legal but declared null by courts b/c it violated fundamental principles or is against public policy

Question 24

Voidable contract

Answer 24

valid agreement that can be enforceable

• one or more parties can revoke or cancel at any time
• can be legally rejected if a party states a defect

Question 25

Reasons for a voidable contract

Answer 25

- failure by a party to disclose material fact - mistake, misrepresentation or fraud - coercion, undue influence or duress - lack of capacity - breach - minor enters into contract with adult

Question 26

Acceptance

Answer 26

an offer accepted by the parties becomes a contract

Question 27

Withdrawal

Answer 27

offeror can withdraw an offer at any time up to the time that acceptance of offer has been communicated

Question 28

Rejection or counteroffer

Answer 28

offer is terminated if offeree rejects the offer counteroffer is considered rejection of offer

Question 29

Lapse of time

Answer 29

offer terminates at the end of time specified for it

Question 30

Death or insanity

Answer 30

terminates the offer

Question 31

Destruction of property

Answer 31

when improvements are destroyed by fire or natural disaster, offer is terminated

Question 32

WILD CARD

Answer 32

W - withdrawal I - insanity L - lapse of time D - death of either property C - counteroffer A - acceptance R - rejection D - destruction of property

Question 33

Contract Termination | BRRLAP

Answer 33

``` Breach Revocation Renunciation Lapse of Time Abandonment Performance ```

Question 34

Breach

Answer 34

a party fails to meet obligations injured party can seek relief in court

Question 35

Revocation

Answer 35

can legally revoke and terminate the contract sometimes they have power to do so, but not the legal right

Question 36

Renunciation

Answer 36

mutual consent of both parties to terminate

Question 37

3 remedies for breach of contract

Answer 37

Suit for Cancellation (Rescission) Suit for Performance Suit for Damages

Question 38

Liquidated Damages

Answer 38

specified and agreed to upon contract both parties have agreed to penalty in the event of a breach by either party usually involves seller retaining deposit if buyer defaults

Question 39

Unliquidated Damages

Answer 39

not specified in contract, but determined by court suit for damages

Question 40

To act as the buyer's broker and receive compensation from them, a licensee may use an _______

Answer 40

Exclusive Buyers Brokerage Agreement

Question 41

Agreement that establishes exclusive representation w/ buyer, provides retainer fee, contains limitation of licensee's liability

Answer 41

Exclusive Buyers Brokerage Agreement

Question 42

right to buy property during specified period of time unilateral no promise to buy property, just an option

Answer 42

option contract

Question 43

- in writing - price and terms - length of time - legal description - consideration ($)

Answer 43

option contract requirements

Question 44

token consideration is a ____, not a ______

Answer 44

listing, not a contract.

Question 45

Another name for contract for deed is _____

Answer 45

installment contract

Question 46

in what circumstances is a broker's commission subject to forfeiture?

Answer 46

The broker violates a fiduciary duty.

Question 47

To which of the following does the phrase "meeting of the minds" refer?

Answer 47

Offer and acceptance

Question 48

Which statute requires a purchase and sale contract to be in writing to be enforceable?

Answer 48

Statute of Frauds

Question 49

expiration of specified time period, death of offeror, counteroffer can all do what?

Answer 49

terminate an offer

Question 50

what cannot terminate an offer?

Answer 50

a failure to obtain a binder deposit

Question 51

What type of contract exists when the court determines that a contract existed due to the actions of the parties?

Answer 51

Implied contract

Question 52

A buyer and seller entered into a Purchase and Sale Agreement. The buyer chose not to close and defaulted on the agreement. The seller claimed the escrow deposit. What type of damages can be sought?

Answer 52

Liquidated damages to the seller

Question 53

what is true of an "as is" provision in a sales contract?

Answer 53

The seller is still required to disclose all known defects that may materially affect the value of the property.

Question 54

What is true regarding the Statute of Frauds?

Answer 54

it requires certain contracts to be in written form to be enforced in court

Question 55

Option contract is a _____ contract that is binding upon _____

Answer 55

unilateral, Optionor

Question 56

Acceptance, Rejection, Withdrawal are all ways that an____ can be _____

Answer 56

offer, terminated

Question 57

Breach, Performance, or Lapse of time are examples of _____

Answer 57

valid ways to terminate a contract