Chapter 11: Real Estate Contracts. Key Terms Part 2 Flashcards
Liquidated damages
The sum agreed on to serve as damages in case of future default.
Novation
Substitution of a new contract for an existing one.
Offer and acceptance
Considered a “meeting of the minds”
Option
A contract binding one party, other party is for you to act up on this offer or not. Example: lease with the option to buy.
Parole evidence rule
The convention that a written contract overrides spoken promises.
Recission
A return to the status quo. In contract law, rescission has been defined as the unmaking of a contract between parties. Rescission is the unwinding of a transaction. This is done to bring the parties, as far as possible, back to the position in which they were before they entered into a contract (the status quo ante).
Specific performance
A court action usually asking that the seller forced to sell as agreed.
Statute of frauds
A law requiring certain contracts to be in writing.
Statute of limitations
A law on time limit after which one cannot assert a legal right. A woman of time in which one can sue.
Time is of the essence
A contract clause requiring punctional performance.
Unenforceable contract
A seemingly valid contract but neither party can sue to force the performance.
Unilateral contract
A one sided promise, valid only if the other party acts. I will do this if you do that. For example the police offer a reward for information that leads to the capture of a suspect.
Valid contract
A contract that meets all legal requirements.
Void contract
A contract that does not meet all legal requirements.
Voidable contract
A contract that is binding, but one party may disaffirm it. A minor enters into a contract. However if this minor is married then the contract is not a “voidable contract” and will be treated under normal contract.
