Unit 3: Introduction to Contracts
A license holder uses a TREC-promulgated residential contract to create a contract for deed. Which statement is TRUE?
The license holder is at risk of having his license suspended or revoked for engaging in the unauthorized practice of law.
Once a sales contract is completed with all parties fulfilling their promises, the ownership changing hands, and the seller receiving the sales price amount, the sales contract is
an executed contract.
A revocation is when
an offeror revokes their offer before acceptance by the offeree.
Which of the following is considered an executory contract?
The answer is all of these. Under subchapter D, chapter 5 of the Texas Property Code an executory contract for which closing and delivery of the deed will occur more than 180 days after both parties sign the contract include contracts for deed, lease-purchase, and lease-option transactions.
Which of the following is required for a valid contract?
The answer is consideration. Consideration is something of legal value offered by one party and accepted by another as an inducement to perform or to refrain from performing some act. Anything that has been bargained for and exchanged is legally sufficient to satisfy the requirement for consideration.
A contract must meet certain minimum requirements to be considered legally valid. All of the following are essential elements of a valid contract EXCEPT
The answer is earnest money. The essential elements of a valid contract are offer and acceptance, consideration, legally competent parties, mutual agreement, and legal purpose. Earnest money is not required for a valid contract.
The essential elements of a contract include all of the following EXCEPT
The answer is earnest money. To be legally valid, a contract does not require earnest money. Consideration can be the mutual exchange of promises.
Which of these is an example of a bilateral contract?
The answer is independent contractor agreement. An independent contractor agreement is a bilateral agreement that clarifies the relationship between a sales agent and a sponsoring broker; the parties exchange promises regarding their respective duties and obligations.
When a seller proposes a deviation from the terms of an offer, the seller is considered to be
The answer is making a counteroffer. The rejection of an offer with a proposal of a deviation from the terms of the offer is called a counteroffer.
Which of the following is an example of a unilateral contract?
The answer is open listing agreement. An open listing agreement is an offer by the property owner to compensate the first agent that produces a buyer; the agent makes no promises.
A legally enforceable agreement under which two parties promise to do something for each other is classified as
a bilateral contract.
When a contract lacks one of the essential elements of a legal contract it is
void
A contract to perform an unlawful act is considered which of the following?
The answer is void. A contract must be for a legal act. No one may enter into a legal contract for an illegal purpose.
A seller accepted money from a buyer for his unrestricted right to cancel the purchase transaction (option to terminate) within ten days of the executed date of the sales contract. This agreement is
a unilateral contract.
A contract with a person under duress is
voidable.
A couple starts celebrating the sale of their home after their listing agent calls them with the news that they've received an acceptable offer. The listing agent says he is coming over to get their acceptance and signatures. However, by the time the agent arrives the sellers are completely inebriated. The agent has them sign the contract and then takes it to the title company. This contract is
voidable.