Contracts

Question 1

A legally enforceable promise or set of promises between competent parties, upon legal consideration, to do or abstain from doing some legal act, for which, if breached, a remedy is provided by law

Answer 1

Contract

Question 2

Formed by the suggestion of the parties’ acts and conduct.

Answer 2

Implied Contract

Question 3

The terms are communicated in words, may be written or oral.

Answer 3

Express Contract

Question 4

A contract in which only one party is obligated; ex. Option contract

Answer 4

Unilateral Contract

Question 5

Both parties are obligated, ex. The seller must sell and the buyer must buy.

Answer 5

Bilateral Contract

Question 6

One which has been signed but has not been fulfilled. Ex. A signed purchase agreement which has not closed.

Answer 6

Executory Contract

Question 7

One in which all the parties have met all the terms and conditions of the contract.

Answer 7

Executed Contract

Question 8

Contains all the essential elements of a contract and is binding and enforceable.

Answer 8

Valid Contract

Question 9

Has not legal effect and is not binding on either party; no contract exists.

Answer 9

Void Contract

Null

Question 10

One that is still binding but is flawed; that may be voided if the wronged party chooses.

Answer 10

Voidable Contract

Question 11

Essential Elements of A Valid Contract

Answer 11

1 . Offer and acceptance

2. Consideration
3. Legal capacity
4. Legal objective
5. Disclosure

Question 12

Items of material value

Answer 12

Valuable consideration

Question 13

Things of abstract value such as love and affection.

Answer 13

Good consideration

Question 14

Then there is intent to deceive; ex. lying

Answer 14

Actual Fraud

Question 15

When there is not intent to harm. Ex. Breach of duty

Answer 15

Constructive Fraud

Question 16

Errors regarding the facts of a contract

Answer 16

Mistakes of Fact

Question 17

When a party, in full knowledge of facts, comes to an erroneous conclusion as to their legal ramifications.

Answer 17

Mistakes of Law

Question 18

Allows one party to the contract to substitute a new contractual obligation for his original one.

Answer 18

Accord and Satisfaction

Question 19

The substitution of one party to the contract with a new party

Answer 19

Novation

Question 20

Cancellation of the contract as if it never existed.

Answer 20

Rescision

Question 21

The concept that one may lose his legal rights if he inexcusably fails to exercise them within a reasonable time.

Answer 21

Laches

Question 22

Seller retains the right to employ as many brokers as he wants.

Answer 22

Open Listing

Question 23

Only one broker is hired, but the seller may still sell the property himself and not pay a commission

Answer 23

Exclusive Agency

Question 24

Only one broker is hired as the agent; regardless of who sells the property, the seller must pay the broker a commission; most common type

Answer 24

Exclusive Right to Sell

Question 25

The broker may legally accept as his commission all money from the sale in excess of the net price specified by the seller. Illegal in some states

Answer 25

Net Listing Clause

Question 26

A monetary deposit is required. If either party fails to meet the obligations of the contract, he may sue for rescission, damages, or to have the sale completed

Answer 26

Specific Performance

Question 27

A monetary deposit accompanying a contract. If either party defaults, he loses the amount of it

Answer 27

Earnest Money

Question 28

The owner gives a prospective buyer the right to buy the property at a certain price for a certain period of time

Answer 28

Option

Question 29

Also called land contract or contract for deed; a type of owner financing in which the seller retains title until the full

Answer 29

Installment Sale or Bond for Deed

Question 30

Owner financing in which the buyer receives title at closing.

Answer 30

Purchase Money Mortgage

Question 31

When a property is sold for less than one half the market value.

Answer 31

Lesion Beyond Moiety

Question 32

The contract must be performed within the time limit specified.

Answer 32

Time is of the Essence

Question 33

The buyer's interest in the property after the contract to purchase is signed, but before title is actually transferred.

Answer 33

Equitable Title