Ch 11

Question 1

Contract

Answer 1

a voluntary agreement or promise between legally competent parties, supported by legal consideration, to perform ( or refrain from performing ) some legal act

Question 2

Express vs Implied contract

Answer 2

Express- intentions in words

Implied- acts and conducts

Question 3

Bilateral vs Unilateral contracts

Answer 3

Bilateral- both parties promise to do something for the other; all parties bound and are enforceable against all parties
Unilateral- one party promises to do something to induce the second party to do something; binding and enforceable against only one party

Question 4

Executed vs Executory

Answer 4

Executed- contracts have been fully performed

Executory- require some performance by one or more parties before they are completed

Question 5

Essential elements of valid contract

Answer 5

1. Offer and acceptance
2. Consideration
3. Consent
4. Legal purpose
5. Legally competent parties
6. Validity of contracts

Question 6

Offer may be terminated due to:

Answer 6

1. Rejection, including counteroffer
2. Failure to accept within prescribed time period
3. Revocation by the offeror before acceptance

Question 7

Consent may be deprived by:

Answer 7

1. Mistake
2. Misrepresentation
3. Fraud
4. Undue influence, including chemical substances
5. Duress

Question 8

Validity of Contracts

Answer 8

Valid- binding in court of law
Void- lacks essential elements of valid contract
Voidable- appears valid, but may be disaffirmed or voided by one party based on some legal principle
Unenforceable- no party may sue for performance; type of contract being used

Question 9

Assignment

Answer 9

the transfer of rights or duties under a contract; generally to a third party

Question 10

Novation

Answer 10

the substitution of a new contract for an existing contract

Question 11

Seller defaults, buyer may:

Answer 11

1. Sue the seller for specific performance

2. Sue the seller for damages

Question 12

Buyer defaults, seller may:

Answer 12

1. Sue buyer for the purchase price; this is same as a suit for specific performance
2. Sue buyer for damages

Question 13

Statute of limitations

Answer 13

the time limit in which to enforce rights; time varies for different legal actions, rights not enforced within time period are lost

Question 14

Contracts may be discharged or terminated:

Answer 14

1. Partial performance- with written acceptance
2. Substantial performance- may be sufficient to force payment with certain adjustments
3. Impossibility of performance- legally impossible to perform the required act
4. Mutual agreement- by parties to cancel contract
5. Operation of law- as in the voiding of a contract by a minor, result of fraud, improper alteration of the contract, or expiration of statute of limitations
6. Rescission- one party may rescind the contract and return the parties to their original positions; monies that have been exchanged must be returned

Question 15

Contracts in Real Estate

Answer 15

Written agreements
Contract forms
Listing agreements and buyer agency
Sales contracts
Option agreements

Question 16

Most common written agreements

Answer 16

1. Listing agreements and buyer agency agremnts
2. Real estate sales contracts
3. Option agreements
4. Contracts for deed ( land contracts )
5. Leases
6. Escrow agreements

Question 17

Problems with preprinted forms

Answer 17

1. What info is to be used in filling in blanks
2. hat preprinted info needs to be deleted
3. What additional info is to be added using addenda

Question 18

Binder

Answer 18

“short form” sales contract

Question 19

Equitable title

Answer 19

after the contract is created but before the deed is delivered, the buyer may have an insurable interest in the property being purchased

Question 20

Conversion vs Commingling

Answer 20

mixed vs used