Chapter 9

Question 1

anything of value offered an an inducement to contract (money, action, or forebearance)

Answer 1

Consideration

Question 2

parties of the contract have expressed all the terms and conditions as agreed upon between them. Can be written or oral

Answer 2

express contract

Question 3

a contract that is implied from the conduct and actions of the parties

Answer 3

implied contract

Question 4

a contract based on mutual exchange of promises or acts between two parties (both make promises)

Answer 4

bilateral contract

Question 5

one party makes a promise to the other and the second party returns an action in response to the promise, but not legally bound

Answer 5

unilateral contract

Question 6

a contract that has been fully performed by the parties

Answer 6

executed contract

Question 7

contracts that have not been fully performed (pending)

Answer 7

executory contract

Question 8

a binding and enforceable contract

Answer 8

Valid contract

Question 9

a contract that results from failure to meet some legal requirement

Answer 9

Voidable contract

Question 10

a contract that is absolutely unenforceable and has no legal force or effect (issues with the contract itself, not the parties)

Answer 10

Void contract

Question 11

What are the essential elements of a Valid Contract?

Answer 11

1. Mutual agreement of parties
2. Consideration (exchange something of value)
3. Mentally Competent Parties
4. Legal Promises (promise to perform a legal act)

Question 12

the person making an offer

Answer 12

Offeror

Question 13

The person the offer is being made to

Answer 13

Offeree

Question 14

when an offer is vague and an acceptance will not result in the creation of a calid contract

Answer 14

illusory offer

Question 15

a rejection coupled with a new offer

Answer 15

counteroffer

Question 16

In what ways can an offer be terminated?

Answer 16

1. By rejection or counteroffer
2. Within a prescribed time (specified time limit, or a “reasonable” period of time after the offer is made & before acceptance)
3. By revocation prior to acceptance
4. Be death or insanity prior to acceptance
5. Acceptance by Offeree
6. By expiration of a Power of Attorney

Question 17

anything of value

Answer 17

consideration

Question 18

money that the buyer deposits with the offer to purchase to show that they buyer is earnest, or sincere, in the intent to purchase the property

Answer 18

earnest money

Question 19

legally competent

Answer 19

contractual capacity

Question 20

contracts must have legal purpose

Answer 20

legal objective

Question 21

requires all real estate documents to be in writing

Answer 21

Statute of Frauds

Question 22

states that a written agreement takes priority over a verbal agreement

Answer 22

Parol Evidence Rule

Question 23

physical threat to someone

Answer 23

duress

Question 24

emotional threat to someone

Answer 24

undue influence

Question 25

seller in an auction reserves the right to reject all incoming bids

Answer 25

With Reserve

Question 26

the seller holds no reservations and has indicated her acceptance of whatever bids are obtained

Answer 26

Without Reserve/Absolute

Question 27

Who can accept an offer for a seller: A broker or an auctioneer?

Answer 27

An auctioneer

Question 28

allows contracts to be created by electronic means and recognizes that an electronic signature is binding

Answer 28

Uniform Electronic Transaction Act (UETA)

Question 29

What are the four ways a CONTRACT can be terminated?

Answer 29

1. Agreement of parties 2. Full performance 3. Impossibility of performance 4. Operation of law

Question 30

each party in a transaction releases the other from performance

Answer 30

release

Question 31

settlement agreement between the parties, often in the form of some compromise

Answer 31

accord and satisfaction

Question 32

replacing a prior contract with a new contract

Answer 32

novation

Question 33

when all terms of the contract have been fully completed by all parties

Answer 33

full performance

Question 34

describes the manner in which the rights or liabilities of parties may be changed by the application of law without the act or cooperation of the parties affected

Answer 34

operation of law

Question 35

failure, without legal excuse, to perform any promise that form the whole or part of a contract

Answer 35

breach of contract

Question 36

the transfer of legal rights and obligations by one party to another

Answer 36

assignment

Question 37

a term that means contractual terms and dates must be strictly adhered to

Answer 37

time is of the essence

Question 38

What are five ways a contract can be remedied?

Answer 38

1. Compensation 2. Consequential 3. Recission 4. Liquidated Damages 5. Specific Performance

Question 39

compensation for any financial loss caused by the breach as may be awarded by the court

Answer 39

compensatory damages

Question 40

amount of money agreed upon in the contract for damages

Answer 40

liquidated damages

Question 41

to make a party do what they said they would do, specifically a seller in breach

Answer 41

specific performance