Chapter 8 Flashcards Preview

Real Estate Licensing Vocabulary > Chapter 8 > Flashcards

Flashcards in Chapter 8 Deck (33):
1

Assignment

The transfer to another party in writing of rights or interest in a bond, a mortgage, a lease, or another instrument

2

Auction

A form of selling property where oral bids are taken and the property is sold to the highest bidder

3

Bilateral Contract

Contract where all parties to the instrument are legally bound to act as prescribed

4

Breach of Contract

The violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due

5

Compensatory Damages

Money damages awarded to the injured party to compensate them for the breach of contract, but not to punish the breaching party

6

Consequential Damages

Award of special damages if the breaching party entered the contract with plans to breach; injured party may sue for lost profits

7

Consideration

(1) That received by the grantor in exchange for a deed

(2) Something of value that induces a person to enter into a legally enforceable contract

8

Contract

A legally enforceable promise or set of promises between legally competent parties that must be performed for consideration. If a breach of the promise occurs, the law provides a remedy

Can Be:

(1) Unilateral- only one party is bound to act

(2) Bilateral - all parties to the instrument are legally bound to act as prescribed

9

Counteroffer

A new offer made in response to an offer received. It has the effect of rejecting the original offer

10

Earnest Money Deposit

Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed

11

Executed Contract

A contract in which all parties have fulfilled their promises in the contract

12

Executory Contract

A contract under which something remains to be done by one or more of the parties

13

Express Agreement/Contract

An oral or written contract in which the parties state the contract’s terms and express their intentions in words

14

Implied Agreement/Contract

A contract under which the agreement of the parties is demonstrated by their conduct

15

Legality of Obect

The purpose of a legally enforceable contract cannot be for illegal actions or acts against public policy

16

Legally Competent Parties

People who are recognized by law as being able to contract with others; those of legal age and sound mind; a requirement of a legally enforceable contract

17

Liquidated Damages

An amount predetermined by the parties to a contract as compensation to an injured party if the other party breaches the contract

18

Meeting of the Minds/Mutual Assent

A deliberate agreement between parties; offer and acceptance; “meeting of the minds.” A requirement of a legally enforceable contract

19

Novation

Substituting a new contract for an old one
or substituting new parties to an existing contract

20

Offer

The promise by one party to act or perform in a certain manner if the other party agrees to act or perform as requested;

Shows an intention to enter into a contract

21

Offer and Acceptance

Two essential components of a valid contract; See mutual assent and acceptance

22

Parol Evidence Rule

A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be varied or contradicted by prior or contemporaneous oral or written negotiations

23

Reality of Consent

If misrepresentation, fraud, mistake of fact, undue influence or duress are absent in contract formation, good contract is formed

24

Rescission

The legal remedy of canceling, terminating, or annulling a contract and restoring the parties to their original positions. Contracts may be rescinded due to mistake, fraud, or misrepresentation. There is no need to show any money damage

25

Specific Performance

A legal action to compel a party to
carry out the terms of a contract

26

Statute of Frauds

A state law that requires that certain instruments that convey interest in real estate be in writ- ing to be legally enforceable, such as deeds, real estate sales contracts, and certain leases

27

Statute of Limitations

That law pertaining to the period of time within which certain actions must be brought to court or be lost

28

Time is of the Essence

A phrase in a contract that requires the performance of a certain act no later than a stated time or the noncompliant party is in breach and the contract may be voidable by the opposite party

29

Unenforceable Contract

A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it. For example, a verbal contract is generally unenforceable

30

Unilateral Contract

A one-sided contract wherein one party makes a promise to induce a second party to do some-thing. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise

31

Valid Contract

A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it

32

Voidable Contract

A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties

33

Void Contract

A contract that has no legal force or effect because it does not meet the essential elements of a contract