CHAPTER 8 REAL ESTATE CONTRACT LAW
Which contract is enforceable?
A contract to demolish a building belonging to one of the parties.
executory contract
A contract yet to be performed
Which contract usually does not mention a purchase price?
A lease
Which of the following is considered a legal description of a property?
A metes and bounds description
The legal detriment test is a test for consideration. Under this test, consideration exists if
A party agrees to give up a legal right they have in exchange for something.
Which is NOT an essential term of a real estate sales contract?
A provision specifying the broker's commission
Which item would NOT ordinarily be mentioned in a lease?
A purchase price
Catherine offers to sell her house to Laticia for $100,000. Laticia says she's interested but unsure. She tells Catherine, "Look, your house is kind of run-down. I'm not sure it's worth $100.000. You try to find a buyer, I'll give you $500 if you you give me a chance to take you up on whatever offer you receive." Catherine agrees and takes the $500. Which phrase best describes Catherine and Laticia's deal?
A right of first refusal
Which is NOT a major kind of listing?
A short-sale listing
Which is not a major kind of listing agreement?
A short-sale listing
A court might need to interpret a contract if...?
All of the answer choices provided are correct
Specific Performance
An action to compel performance of an agreement, e.g., sale of land as an alternative to damages or rescission.
Implied Contract
An agreement that has not been put into words, but is implied by the actions
Which phrase is most likely to describe a real estate sales contract?
An express, bilateral contract
Max is a newly licensed real estate agent. He gets a position with a brokerage firm that plans to pay him commissions, not a salary. What kind of contract might Max want to make with his new firm?
An independent contractor agreement
............ is when a court orders a person to do or not do a certain action.
An injunction
.............. must provide enough detail about the essential terms of a deal that the other person can accept simply by saying, "Yes."
An offer
Which of the following is enforceable under the statute of frauds?
An oral contract to lease an apartment for 11 months.
Consideration
Anything given or promised by a party to induce another to enter into a contract, such as money, personal services, or a promise not to do something.
An otherwise enforceable contract can become void if...?
Applicable law changes to make the object of the contract illegal.
Bill is buying Sue's house for $250,000. When they arrive at closing, Bill doesn't have the money, and Sue doesn't have a deed. Who breached the contract?
Both of them
Which of the following is necessary to create a valid contract?
Consideration
The doctrine of substantial performance is applied often in
Construction contracts
The doctrine of substantial performance is applied often in...?
Construction contracts
Which of the following can a court award while enforcing a contract?
Expectation damages
What is the best way to terminate a contract?
Full performance by both parties
Jimmy and James offer to sell a plastic bead necklace to Mary for $100. Mary agrees, and gives Jimmy and James $100. They give Mary the necklace. When Mary gets home, she shows the necklace to her sister, Olivia. Mary suffers from schizophrenia. Who might be able to void this contract?
Mary
What is the most common consideration for an agreement to terminate a contract?
Mutual agreement of the parties
If a person makes an offer in jest, does an acceptance create a valid contract?
No. An offer must be made with an intent to create a legally binding contract.
Which of the following can be assigned
None of these: a drug supply contract, a contract for personal services, a lease that prohibits subletting
If a contract contains a liquidated damages provision, the court may refuse to enforce it if the court finds the provisions is...?
Punitive
The following are all potential awards in a contract suit, EXCEPT for
RECONSIDERATION
............ is when the court interprets a poorly written contract to find the parties' intentions and issues an order clarifying the parties' respective obligations under the contract.
Reformation
is when the court interprets a poorly written contract to find the parties intentions and issues an order clarifying the parties' respective obligations under the contract.
Reformation
Novation
The substitution or exchange of a new obligation or contract for an old one by the mutual agreement of the parties.
Which is NOT an essential element of a contract?
Time is of the essence clause
Void
To have no force or effect; that which is unenforceable.
Which is NOT an underlying reason for the statute of frauds?
To keep town clerks employed
Which is NOT underlying reason for the statute of frauds?
To keep town clerks employed
If the parties mutually agree to terminate a contract, the original contract becomes...?
Unenforceable
Hubert hires Thomas to build a casino in downtown Funsville. The contract provides that the casino must be completed within a year, but does not specify when Thomas must start. Thomas begins to build the casino seven months into the contract. In the eighth month, Funsville enacts a law banning all casinos and prohibiting any casinos from being built or operated. Hubert and Thomas's contract might have become...?
Void
If a party does not say "yes" to an offer, courts consider the party's response...?
a rejection.
A contract for an illegal purpose can be called...?
a void contract.
Which of the following is NOT a major way to discharge a contract?
casual disregard / Are major ways: impossibility, full performance, breach
When two parties close on a house, the sales contract is
executed
A person seeking an injunction usually must show...?
irreparable harm.
The duty to perform in good faith...?
is mutually binding on both parties.
If a contract contains a liquidated damages provision, the court may refuse to enforce it if the court finds the provision
punitive = inflicting or intended as punishment.
A BLANK warns parties that failure to meet contact deadlines may cause breach
time is of the essence clause
Under the statute of frauds, contracts for the sale of land must be
written
Under the statute of frauds, contracts for the sale of land must be ...?
written
Time is of the Essence
A condition of a contract expressing the essential nature of performance of the contract by a party in a specified period of time.
Executed Contract
A contract in which both parties have completely performed their contractual obligations.
Express Contract
A contract that has been put into words, either spoken or written
............ is when one person agrees to take on the duties and benefits of another's contract.
Assignment
The statute of frauds requires what kind of contracts to be in writing?
Contracts involving the sale of land.
If an agreement contains all the essential elements of a contract, it is...?
Valid
Sales contracts in real estate are...?
Written
Samantha offers to sell her house to Rebecca. Rebecca declines the offer. Samantha tells Rebecca she better buy the house, or she'll tell Rebecca's employer about the time Rebecca stole some equipment from the employer. Rebecca agrees to buy Samantha's house. This contract might be voidable by Rebecca on the ground of
coercion = the practice of persuading someone to do something by using force or threats
The duty to perform in good faith is...?
consistent with our expectations when we make a contract.
Bilateral Contracts
A contract in which each party promises to do something.
Executory Contract
A contract in which one or both parties have not yet completed performance of their obligations.
Which of the following can a court award while enforcing a real estate sales contract?
A specific performance award
Assignment
A transfer to another of any property in possession or in action, or of any estate or right therein. A transfer by a person of that person's rights under a contract.
Which is an example of an assignment?
All the above: Assigning a lease to a new tenant, selling a mortgage loan, selling someone a subway token
Contract
An agreement to do or not to do a certain thing
BLANK occurs when you terminate one contractual obligation and substitute a new one for it.
Novation
Voidable
That which is capable of being adjudged void, but is not void unless action is taken to make it so.
Recission
The cancellation of a contract and restoration of the parties to the same position they held before the contract was entered into.
Holly owns a vacant lot next to Wallace's store. Wallace says to Holly, "I'll pay you $3,000 a year if you don't build anything on your vacant lot for the next 10 years." Holly agrees. Do they have a contract?
Yes. By not taking action you are legally entitled to take this as sufficient consideration.
Which is NOT an essential element of contract?
a conditional clause Essential elements include: consideration, legal purpose, legal capacity
The legal detriment test is a test for consideration. Under this test, consideration exists if...?
a party agrees to give up a legal right they have in exchange for something.
A contract that lacks consideration can be called
a void contract.
Melinda and Sasha enter into a written sales contract for Melinda's home. Two weeks before closing, Sasha works on finalizing her loan documents and schedules a home inspection for three days before closing. Melinda works on some agreed repairs and hires a lawyer to write her deed. At this point, Melinda and Sasha's contract is...?
an executory contract.
An injunction
an order directing a party to do something or not do something
Unilateral Contract
A contract in which one party promises to do something if the other party performs a certain act, but the other party does not promise to perform it; the contract is formed only if the other party does perform the requested act.
Wilbert and Holly have a construction contract that provides, " in the event an act of god prevents Wilbert from completing construction of the planned structure, the parties agree that Wilbert shall pay Holly $10,000 dollars in damages." Such as a provision called
A liquidated damages provision
Statute of Frauds
A state law, based on an old English statute, requiring certain contracts to be in writing and signed before they will be enforceable at law, e.g.. contracts for the sale of real property, contracts that are not performed within one year.
Statute of Limitations
A statute prescribing a period of limitations for the bringing of certain kinds of legal actions.
Liquidated Damages
A sum agreed upon by the parties to be full damages if a certain event occurs.
Which of the following are usually considered to have legal capacity?
Adults
A court might need to interpret a contract if
All the above: the contract was poorly drafted, the parties disagree about what a contract requires, a party sues on the contract
In , a real estate agent is certain to receive a commission if a closing occurs.
An exclusive right to sell listing
Juan asks Teresa to help him sell his house. Juan finds a buyer. At the closing, Teresa receives a commission check. What type of listing agreement did Juan make?
An exclusive right to sell listing
must provide enough detail about the essential terms of a deal that the other person can accept simply by saying, "Yes".
An offer
Olivia asks several real estate agents to help her sell her house. A buyer is found. At the closing, no agent receives a commission. What type of listing agreement did Olivia make?
An open listing
Willie offers to sell his house to Leopold for $100,000. Leopold says he is interested but unsure. He offers Willie $200 to hold the offer open for three weeks to let him think about it. Willie agrees and takes the $200. Which phrase best describes Willie and Leopold's deal?
An options contract
Brenda and Lucinda enter into a real estate sales contract for Brenda's property, which states, "this sales contract is for Brenda's property and all the structures on it." A mobile home is parked on Brenda's property. Lucinda believes their deal includes the mobile home as well as the land. Brenda says it doesn't. Which of the following steps should Lucinda take to resolve this conflict?
Ask a court to interpret the contract.
What's the best way to terminate a contract?
Full performance by both parties
Valid
Having force, or binding force; legally sufficient and authorized by law
If a party has , it means they are an adult and understand the consequences of entering a contract.
Legal capacity
Hubert says to Melvin, "I will see you my car for $500." Melvin says, "That sounds interesting." Hubert says, "if I don't hear back from you, I'll assume you accept. I'll meet you here next Tuesday." Hubert does not hear from Melvin. He arrives at the meeting place of Tuesday morning. Do Hubert and Melvin have a contract?
No. Silence cannot be acceptance.
............ occurs when you terminate one contractual obligation and substitute a new one for it.
Novation
Phillip and Mandy make a contract. Mandy breaches. Phillip waits 7 years to sue on the contract. He loses, and the judge rules in Mandy's favor. What is the most likely reason for his loss?
Statute of limitations
Oliver offers to sell Henrietta a watch for $50. He bought the watch for one dollar at a garage sale, so he thinks he can make a big profit selling the watch to Henrietta. Henrietta, a watch expert, recognizes the watch as the long-lost imperial timepiece of the great Emperor Doja. Henrietta knows the watch is worth $1,000,000, easily. She buys the watch from Oliver. On what ground might the contract be voidable?
Unconscionability = not right or reasonable
Pam hires Will to acquire and deliver a shipment of doodlebugs within two weeks, with time being of the essence. Will receives the shipment of doodlebugs, but Tony offers Will more money for the doodlebugs than Pam offered. Will does not expect to receive any more doodlebugs before his delivery date for Pam. Will decides to deliver the doodlebugs to Tony and collect the larger payment. Will's choice is an example of...?
a violation of the duty to perform in good faith.
Taken altogether, offer, rejection, counteroffer, and acceptance make up
bargaining, contract negotiation, meeting of the minds
A buyer's offer says, "This offer remains open until noon on May 21. If you wish to accept this offer, you must accept in writing delivered to our broker's office by noon on May 21." If the seller wishes to accept the offer, the seller should...?
deliver a written acceptance to the broker's office by noon on May 21.
The essential elements of a contract include offer and acceptance, consideration, legal capacity, and
legal purpose
For an executed contract, all the obligations of the parties under the contract have been
performed
