Contract Law

How much time does a seller have to accept a buyer's offer?

A "reasonable" time, or until the expiration date on the offer.

Executory

A completed agreement which enjoins one or both principal parties to perform certain actions in order for the contract to become fully executed.

Which of the following contracts can be assigned to another party?

A contract for the sale of a house.

Which of the following correctly defines "express"?

A contract in which all the terms and covenants of the agreement have been manifestly stated and agreed to by all parties, whether verbally or in writing.

Bilateral

A contract where both parties promise to perform in exchange for performance by the other party.

Which of the following correctly defines "bilateral"?

A contract where both parties promise to perform in exchange for performance by the other party.

Statute of Frauds

A law requiring certain contracts to be in writing in order to be enforceable. Examples are real property conveyances, listing agreements, and longterm leases.

Contract

A potentially enforceable agreement between two or more parties who agree to perform or not perform some act. If valid, the contract is enforceable, with limited exceptions.

Which of the following correctly defines "contract"?

A potentially enforceable agreement between two or more parties who agree to perform or not perform some act. If valid, the contract is enforceable, with limited exceptions.

Offer and Acceptance

A process that creates a contract. Acceptance is the offeree's unequivocal, manifest agreement to the terms of an offer. The offer becomes a contract when the acceptance has been communicated to the offeror.

Which of the following correctly defines "offer and acceptance"?

A process that creates a contract. Acceptance is the offeree's unequivocal, manifest agreement to the terms of an offer. The offer becomes a contract when the acceptance has been communicated to the offeror.

Which of the following is an executory contract?

A sale contract before closing.

Which of the following contracts must be in writing to be enforceable?

A two-year lease.

Termination of an offer

Acceptance; rejection; expiration; counteroffer; death or insanity

Implied

Actions of parties suggest agreement

Express

All terms manifestly stated

Unilaterial

An agreement in which only one party promises to perform, contingent on the other party's performance of an optional action.

Void

An agreement that is null and cannot be enforced.

Which of the following correctly defines "void"?

An agreement that is null and cannot be enforced.

Voidable

An agreement that is subject to being nullified because a party to the agreement acted under some legal disability. Only the disadvantaged party can take action to void the contract.

Express

An express contract is one in which all the terms and covenants of the agreement have been manifestly stated and agreed to by all parties, whether verbally or in writing.

Consideration

An item of tangible or intangible value, or one's promise to do or not do some act which is used as an inducement to another party to enter into a contract.

Which of the following correctly defines "consideration"?

An item of tangible or intangible value, or one's promise to do or not do some act which is used as an inducement to another party to enter into a contract.

Implied

An unstated or unintentional agreement that may be deemed to exist by implication because of acts or statements by any of the parties to the agreement.

Implied Contract

An unstated or unintentional agreement that may be deemed to exist when the action so any of the parties suggest the existence of an agreement

Counteroffer

Any new offer or amended offer made in response to an offer.

Assignment of a contract

Assignable unless expressly prohibited or a personal service

Bilateral

Both parties promise to perform in exchange for performance by other party

Validity

Complies with legal validity criteria

Lapse

Contract expires on its deadline

Performance

Contract is fulfilled

Executed

Contract is fully performed

Rescission

Cooling period nullification

Void

Does not meet criteria; is not a contract

Abandonment

Failure to perform

Invalidity

If void, need not be terminated

Infeasibility

Impossible to perform

Statute of Limitations

Injured party must act within time frame

Voidable

Invalid if disaffirmed; enforceable if not disaffirmed

Valid

Legal status of a contract that meets requirements of: competence of parties, mutual consent, valuable consideration, legal purpose, and voluntary good faith. A prerequisite for enforceability.

Which of the following correctly defines "valid"?

Legal status of a contract that meets requirements of: competence of parties, mutual consent, valuable consideration, legal purpose, and voluntary good faith. A prerequisite for enforceability.

Statue of Frauds

Must be written to be enforceable

Contracts

Mutual promises based on a "meeting of the minds" to do (or refrain from doing) something

An oral contract to sell mineral rights is performed by both parties. Six months later, the seller has second thoughts and wants to reclaim the rights under the Statue of Frauds. What is the likelihood that the seller will succeed?

Nil, because the Statute of Frauds is irrelevant to a contract that has been performed.

Counteroffer

Offer in response to an offer or an altered offer; nullifies original offer

Revocation of an offer

Offeror may revoke prior to communication of acceptance by offeree

Express Contract

One in which all terms and covenants of the agreement have been manifestly stated and agreed to by all parties, whether verbally or in writing

Revocation

One party cancels without consent of the other party

Breach

One party defaults

Unilateral

One party promises to perform if other party acts - but other party does not have to act

Mutual Agreement

Parties agree to alternate form of action

Executory

Performance is yet to be completed

Rescission

Rescission is the act of nullifying a contract.

Contract preparation

Restricted unless license as attorney or a party to the contract

Unenforceable

State laws declare that some contracts are enforceable only if they are in writing. Thus, while an oral contract may meet the tests for validity, if it falls under the laws requiring a written contract, the parties will not have legal recourse to enforce performance. An oral long-term lease and an oral real estate sales contract are examples of contracts that may be valid but not enforceable.

What is rescission?

The act of nullifying a contract.

Which of the following correctly defines "rescission"?

The act of nullifying a contract.

A homeseller signs a listing agreement with a broker and the next week decides not to sell and revokes the listing. Which of the following is true?

The broker may have a claim for damages.

A seller immediately accepts a buyer's offer but waits eight days before returning the accepted document to the buyer. Meanwhile, the offer has expired. Which of the following is true?

The buyer has no obligations to the seller whatsoever.

A buyer submits an offer to a seller and then dies in a car accident. Before learning of the buyer's death, the seller accepts the offer. Which of the following is true?

The buyer's death terminated the offer.

Legal Purpose

The content, promise, or intent of a contract must be lawful. A contract that proposes an illegal act is void

A buyer submits an offer to a seller. Two hours later, the buyer finds a better house, calls the first seller, and withdraws the offer. Which of the following is true?

The original offer is legally extinguished.

Voluntary, good faith act

The parties must create the contract in good faith as a free and voluntary act. A contract is thus voidable if one party acted under duress, coercion, fraud, or misrepresentation.

Offer and acceptance

Valid offer and valid acceptance creates contract Offer becomes contract on communication of acceptance by offeree to offeror

A prospective homebuyer submits a signed offer to buy a house with the condition that the seller pays financing points at closing. The seller disagrees, crosses out the points clause, then signs and returns the document to the buyer. At this point, assuming all other contract validity items are in order, the status of the offer is

a counteroffer.

A good example of a unilateral contract is

a listing agreement.

A bilateral contract is one in which

both parties promise to do something in exchange for the other party's performance.

Valid yet unenforceable

certain oral contracts

A contract that conveys an interest in real estate must

contain a legal description of the property.

Breach of Contract

default without cause legal remedies; rescission; forfeiture; suite for damages; specific performance

According to contract law, every valid contract is also

enforceable or unenforceable

A party sells a summer cottage appraised at $100,000 to a stranger for $50,000. The seller's family wants to challenge the validity of the sale contract. The most apparent weakness of the contract that they might be able to attack is the

insufficiency of the consideration exchanged for the property.

The guardian for a mentally incompetent party enters into an oral contract with another party to buy a trade fixture. This contract

is possibly valid and enforceable.

An unscrupulous investor completes a contract with a buyer to sell a property the investor does not own. The sale contract for this transaction

is void

A buyer agrees to all terms of a seller's offer except price. The buyer lowers the price by $1,000, signs the form, and mails it back to the seller. At this point, the seller's offer

is void.

A contract may be defensibly terminated without damages if

it is impossible to perform.

A contract is discharged whenever

it is performed.

An important legal feature of a contract is

it represents a "meeting of the minds."

Real estate contracts that are not personal service contracts

may be assigned.

The statute of limitations requires that parties to a contract who have been damaged or who question the contract's provisions

must act within a statutory period.

Forms of contract termination

performance; infeasibility; mutual agreement; rescission; revocation; abandonment; lapse; invalidity; breach

The purpose of the statute of frauds is to

require certain conveyance-related contracts to be in writing.

The valuable consideration necessary to make a contract valid must be

something specifically offered in exchange for something else.

A landlord suddenly terminates a tenant's lease in violation of the lease terms. The tenant takes action to compel the landlord to comply with the violated terms. This is an example of a suit for

specific performance.

In a suit for damages by reason of default, the damaged party may claim liquidated damages if

the contract stated a specific amount due to a damaged party.

A breach of contract is

the failure of a party to perform according to the terms of the contract.

The necessary condition of mutual consent may be found lacking in a contract if

the offer which was accepted is vague.

An implied contract may be deemed to exist if

the parties act is if there is a contract.

As part of a construction contract between a contractor and a buyer, the contractor promises to complete construction by November 20. This promise can be construed as

valuable consideration.

A homeowner encourages an agent to aggressively persuade a buyer to purchase his house by overinflating historical appreciation rates. The agent and the seller agree that 25% annual appreciation would work, even though this figure is four times actual rates. The pitch succeeds, and the seller accepts the buyer's resulting offer. This contract is

voidable.