Ch. 3 Introduction to Contracts

Listing Contract

A contract in which a property owner employs a real estate broker to market the property described in the contract

Novation

The substitution or exchange of a new obligation or contract for an old one by the mutual agreement of the parties.

Unilateral Contract

When 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.

If Buyer Kyle would have agreed to give Seller George his prized possession and $50,000 in cash, would the contract still be valid?

Yes because both parties would have agreed and thus there would have been consideration

Statue 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 not be performed within one year

Bilateral Contract

A contract in which each party promises to do something

Assignment

A transfer of benefits and obligations within a contract to a 3rd party who is not originally a party to the contract.

Breach of Contract

A violation of the terms or conditions of a contract without a legal excuse

Consideration

Anything given or promised by a party to include another to enter into a contract, e.g., personal services or even love and affection. It may be a benefit conferred upon one party or a detriment suffered by the other. (not always cash or money)

A written listing agreement between a broker and his/her principal is considered what type of contract...?

Bilateral Contract

A valid contract must include which of the following...?

Consideration Offer and Acceptance Legal purpose

A legally enforceable agreement to do, or not to do something is called a/an...?

Contract

A contract that has been put into words, either spoken or written is considered a/an...?

Express contract

If a contract requires a party to not do something, it is referred to as...?

Forebearance

Valid

Having force, or binding force; legally sufficient and authorized by law (All legal elements)

An agreement that has not been put into words, but is implied by the actions of the parties is considered a/an...?

Implied Contract

A voidable contract is typically used by a...?

Minor

Since Buyer Kyle did not discuss anything about earnest money and/or option monies, could Seller George come back and void the contract?

No because earnest and option monies are not a requirement for a valid contract

Which of the following is an example of a unilateral contract...?

Open Listing

An irrevocable right to buy a property at an agreed upon price is called a/an...?

Option

If a contract requires a party to do something, it is referred to as...?

Performance

Which of the following is considered a bilateral contract...?

Sales contract Net listing agreement Exclusive right to sell agreement

A State law requiring certain contracts to be in writing and signed before they will be enforceable at law is known as the...?

Statue of Frauds

Voidable

That which is capable of being adjusted void, but is not unless action is taken to make it so

Rescission of Contract

The abrogation or annulling of contract; the revocation or repealing of contract by mutual consent by parties to the contract, or for cause by either party to the contract.

Void

To have no force or effect; that which is unenforceable.