Chapter 7: Contracts

an offer

.............. must provide enough detail about the essential terms of a deal that the other person can accept simply by saying, "Yes."

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.

irreparable harm

A person seeking an injunction usually must show...?

counter offer

A response to an offer to enter into a contract, changing some of the terms of the terms of the original offer. A counter offer is a rejection of the offer (not a form of acceptance), and does not create a binding contract unless accepted by the original offeror.

liquidated damages

A sum agreed upon by the parties to be full damages if a certain event occurs.

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.

agreement of sale

A written agreement or contract between seller and purchaser in which they reach a "meeting of minds" on the terms and conditions of the sale. The parties concur; are in harmonious opinion.

Statute of Frauds

According to the ............, all real estate sales contracts must be in writing.

addendum

Additional pages of material that are added to and become part of a contract.

consideration

Anything given or promised by a party to induce another to enter into a contract, ex: personal services or even love and affection. It may be a benefit conferred upon one party or a detriment suffered by the other.

Offer and Acceptance

Elements required for the formation of a legally binding contract. The expression of an offer to contract on certain terms by one person (the "offeror") to another person (the "offeree"), and an indication by the offeree of its acceptance of those terms.

letter of intent (LOI)

Generally an agreement to agree. It outlines the terms between parties who have not formalized an agreement into a contract. LOIs are generally not binding and unenforceable.

valid

Having force, or binding force; legally sufficient and authorized by law.

void

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...?

punitive.

If a contract contains a liquidated damages provision, the court may refuse to enforce it if the court finds the provisions is...?

No. An offer must be made with an intent to create a legally binding contract.

If a person makes an offer in jest, does an acceptance create a valid contract?

Exclusive Right to Sell Listing

If a seller would like an agent's sales help, but wants to avoid paying a commission if the seller finds the buyer, what kind of listing agreement should the seller avoid?

Unconscionability

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?

no there is no consideration

Palmer is 80 years old. He gives Maxwell a contract that reads, "In consideration of the love and affection Maxwell has shown and will show me, I agree to give Maxwell $500 a year for the next 10 years." Do they have a contract?

Offer and acceptance Rejection and counteroffer Bargaining

Tanya says to Gina, "Would you like to but my house for $300,000?" Gina says, "I can't afford that. Would you take $260,000." Tanya says, "OK." This is an example of:

voidable

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

construction contracts.

The doctrine of substantial performance is applied often in...?

consistent with our expectations when we make a contract.

The duty to perform in good faith is...?

reconsideration

The following are all potential awards in a contract suit, EXCEPT for...?

novation

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

void

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

A contract to make another contract.

What is a collateral contract?

Full performance by both parties

What's the best way to terminate a contract?

Assigning a lease to a new tenant Selling a mortgage loan Selling someone a subway token

Which is an example of an assignment?

When the buyer is unable to obtain a mortgage as stated in the contract and the contract is canceled.

Which is an example of termination by contingency?

short-sale listing

Which is not a major kind of listing agreement?

purchase price

Which item would NOT ordinarily be mentioned in a lease?

An oral contract to lease an apartment for 11 months.

Which of the following is enforceable under the statute of frauds?

consideration

Which of the following is necessary to create a valid contract?

The seller's attorney. The buyer's attorney. The buyer and seller together

Which of the following parties is permitted to draft a real estate contract...?

Agreement of the parties

Wilbert sells imported truffle snouts, and Floyd supplies them. Wilbert and Floyd enter into a truffle snouts supply contract, under which Floyd agrees to deliver 1,000 truffle snouts to Wilbert each week. The domestic market for truffle snouts crashes, and the availability of imported truffle snouts falls off rapidly due to truffle snout shortages abroad. Which of the following is the most likely method of discharge for this contract?

bilateral contract

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

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

lease

a contract that allows someone to possess and use real property for a specified time

express contract

a contract that has been put into words either spoken or written

stature 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 sale of real property contracts that are not performed within one year

statute of limitation

a statute prescribing a period of limitations for the bringing of certain kinds of legal actions

exclusive agency listing

agent doesn't get guaranteed pay if they don't sell the property and the seller sells it on their own

exclusive right to sell listing

agent gets paid even if seller sell's the property on their own.

Specific Performance

an action to compel performance of an agreement, e.g., sale of land as an alternative to damage of rescission

Sales Contract

an agreement in which one person agrees to sell real property to another person, who in turn, agrees to buy the property at a specified price before a specified date.

implied contract

an agreement that has not been put into words, but is implied by the actions of the parties

contract

an agreement to do or not do a certain thing

listing agreement

creates an agency relationship between an agent and a seller and authorizes an agent to sell a property on the sellers behalf

options contract

gives a party a right--but not an obligation -- to purchase a property at a specified price during a specified time

rescission

the cancellation of a contract and restoration of the parties to the same position they held before the contract was entered into

partial performance

when one party performs their obligations under the contract but the other party does not