Unit 10

Question 1

What is a contract?

Answer 1

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.

Question 2

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?

Answer 2

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.

Question 3

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?

Answer 3

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 However, if the parties do perform, the contract is executed and cannot be rescinded under the Statute of Frauds.

Question 4

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?

Answer 4

The original offer becomes void. The changed offer is a new offer, or counteroffer, from the seller to the buyer.

Question 5

When does an offer or counteroffer become a contract?

Answer 5

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.

Question 6

What is the relationship between an executory contract and an executed contract?

Answer 6

An executory contract is waiting to be performed; once it has been performed, it is an executed contract.

Question 7

Describe the legal remedies a damaged party has when another party to a contract breaches the contract.

Answer 7

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.

Question 8

A valid ____ is one that is legally enforceable by virtue of meeting certain requirements of contract law.

Answer 8

contract

Question 9

Valid

Answer 9

enforceable within a statutory time period

Question 10

Valid but unenforceable

Answer 10

some contracts are enforceable only if they are in writing.

Question 11

Void

Answer 11

does not meet the tests for validity, and therefore is no contract at all.

Question 12

Voidable

Answer 12

subject to rescission by a party to the contract who is deemed to have acted under some kind of disability.

Question 13

Competent parties

Answer 13

capacity to contract is determined by legal age, mental competency and legitimate authority.

Question 14

____ _____ requires that a contract involve a clear and definite offer and an intentional, unqualified acceptance of the offer.

Answer 14

Mutual consent

Question 15

_____________ as compensation for performance by the other party. Good consideration is something of questionable value.

Answer 15

Valuable consideration

Question 16

Legal purpose

Answer 16

the content, promise, or intent of a contract must be lawful.

Question 17

Voluntary, good faith act

Answer 17

contract is voidable if one party acted under duress, coercion, fraud, or misrepresentation.

Question 18

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.

Answer 18

contract ;

Question 19

The _______________ restricts the time period for which an injured party in a contract has the right to rescind or disaffirm the contract.

Answer 19

statute of limitations

Question 20

The ___________ requires that certain contracts must be in writing to be enforceable. It concerns the enforceability of a contract, not its validity.

Answer 20

statute of frauds

Question 21

The ______ makes it legal in many states to use electronic signatures in electronic transactions

Answer 21

Uniform electronic transactions act

Question 22

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.

Answer 22

offer

Question 23

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.

Answer 23

acceptance

Question 24

By changing any terms of an offer, the offeree creates a ____, and the original offer is void.

Answer 24

counteroffer

Question 25

The ___ extinguishes the offer and the offer’s right to accept it.

Answer 25

revocation

Question 25

_____ _ _ __ by acceptance, rejection, revocation, lapse of time, counteroffer and death

Answer 25

termination of offer

Question 26

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.

Answer 26

assigned

Question 27

Contract in which all the terms and covenants of the agreement have been manifestly stated and agreed to by all parties.

Answer 27

exxpress contract

Question 28

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

Answer 28

implied contract

Question 29

this contract is one which both parties promise to perform their respective parts of an agreement in exchange for performance by the other party.

Answer 29

bilateral contract

Question 30

this contract only one party promises to do something, provided the other party does something

Answer 30

unilateral contract

Question 31

this contract is one that has been fully performed and fulfilled: neither party bears any further obligation

Answer 31

executed contract

Question 32

this contract is one which performance is yet to be completed

Answer 32

executory contract

Question 33

this contract is one that unduly favors the party with superior bargaining power

Answer 33

unconscionable contract

Question 34

this contract is one dictated by the party who has the greater bargaining advantage

Answer 34

adhesion contract

Question 35

this contract is one whose effects are triggered by the occurrence of a chance event

Answer 35

aleatory contract

Question 36

Contract terminiation

Answer 36

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

Question 37

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

Answer 37

breach of contract

Question 38

Which of the following is a legally-required element of a valid and enforceable real estate contract?

Answer 38

Valuable consideration

Question 39

What is the statute of limitations?

Answer 39

A set period of time during which an injured party can rescind a contract

Question 40

How much time does a seller have to accept a buyer’s offer if the offer does not have an expiration date?

Answer 40

A “reasonable” time, or until the expiration date on the offer

Question 41

Once a transaction closes, a contract is said to be

Answer 41

executed

Question 42

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

Answer 42

insufficiency of the consideration exchanged for the property.

Question 43

Parties can agree to replace a cancelled contract with another contract by the process of

Answer 43

novation.

Question 44

In which circumstances would a buyer most likely sue for specific performance?

Answer 44

The seller backed out of the original sales contract.

Question 45

Which of the following contracts can be assigned to another party?

Answer 45

A contract for the sale of a house

Question 46

Which of the following is an executory contract?

Answer 46

A sale contract before closing.

Question 47

In a suit for damages by reason of default, the damaged party may claim liquidated damages if

Answer 47

the contract stated a specific amount due to a damaged party.

Question 48

All of the following will terminate a contract EXCEPT

Answer 48

assignment of the contract.

Question 49

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.

Answer 49

b)The buyer’s death terminated the offer.