Chapter 6: Contracts Flashcards
The lawsuit filed to compel a seller to convey real property to a buyer under the terms of a valid contract is known as a suit for:
specific performance.
Specific performance is granted by a court of equity by ordering the breaching party to perform the required contract duties.
The terms of a verbal real estate listing agreement between a seller and a real estate agent is enforceable when
None of the above
A real estate listing agreement MUST be in writing to be valid and enforceable.
The failure of one party to perform a duty under the terms of a contract is known as
breach of contract
Failure to perform a contract term is known as a breach of the contract.
In California, buyer-paid liquidated damages to a seller of a one-to-four unit dwelling, when the buyer intends to occupy one of the dwellings,
Check all that apply …
-will be the amount agreed to in the contract if the earnest money deposit is less than 3%.
-cannot exceed 3% of the sales price if the amount of earnest money deposit is over 3%.
Liquidated damages are limited to the amount agreed to if the deposit is under 3% or 3% if the amount of the deposit is over 3%. In California, liquidated damages cannot exceed 3% of the sales price.
A voluntary agreement between legally competent parties to do or refrain from doing something is known as:
a contract
A contract is an agreement between competent legal parties to do some legal act or to refrain from doing some legal act in exchange for consideration.
A written contract is
an express contract
When a contract is written or verbal, it is said to be an express contract.
When a seller’s lender allows a buyer to assume the seller’s existing mortgage and relieves the seller of any further liability for repayment of the loan, __________ has occurred.
a novation
A novation occurs when a new contract is formed by substituting a new party to a contract for an original party or a new obligation for an old one.
A voidable contract is one that is
enforceable, but is subject to rescission by one of the parties
A voidable contract is one which is capable of being made void wherein the injured party may either ratify the contract or cause it to be rescinded.
An offer to purchase property would NOT be terminated by which one of the following events?
- The absence of earnest money
A counter offer terminates the original offer.
The offeror withdrawing the offer prior to acceptance automatically terminates the offer.
The death of the offeree prior to the offeree’s acceptance automatically terminates the offer.
Earnest money is not an element of a valid contract. Consideration is a valid element. In the case of an offer to purchase real estate, the consideration is the mutual promises of the buyer and seller. The offeror (buyer) agrees to purchase and the offeree (seller) agrees to sell.
In order to be valid, a contract must have certain required elements. Which of the following is not a required element?
Notarization
A contract does not have to be notarized to be valid. The four required elements of a contract are competent parties, mutual assent, consideration, and legal purpose.
