Level 11: Real Estate Contracts

What are the 4 contracts that you want to stay away from?

Deeds Mortgages Promissory notes Lease agreements* (except those that are for one year or less and those that are pre-printed/approved by the state supreme court)

T/F. Earnest money is consideration.

False

T/F. Voidable contracts can never be valid contracts.

False Voidable contracts are potentially valid contracts where at least one party has the option to rescind the contract.

T/F. An offer cannot be withdrawn any time prior to the proper communication of the offer's acceptance

False. An offer can be withdrawn any time prior to the proper communication of the offer's acceptance — even if a previously stated deadline for acceptance has yet to expire.

For a contract to be considered executory what to things must be present?

A binding contract on multiple parties One or more of the parties has yet to perform their contractual duties

Any modification of a contract should occur by way of what 2 things:

Addendum Amendment

How is one able to enter into a contract agreement if someone is mentally incapable?

With a representative that has power of attorney (attorney in fact)

Making an offer as specific as possible helps to ensure what? a) that a meeting of the minds occurs b) that the contract has a lawful objective c) unconditional acceptance of the offer d) that both parties are legally competent

a

Oral agreements to buy real estate are: a) non-binding and not executory b) enforceable and binding c) non-binding and executory d) binding and executory

a

When might the term "force of law" be used in place of the term "operation of law"? a) when used to underscore the legally compelling nature of the cause for discharge. b) when used in certain regions of the country that are more litigious c) when a concern for legal accuracy of the term is demanded d) when used to underscore the purely administrative nature of the cause for discharge.

a

Which of the following is NOT a category that contracts can fall under? a) acceptable b) unenforceable c) voidable d) valid

a

Which of the following is TRUE about the statute of limitations? a) all claims must be filed prior to the statutory deadline or the legal right to press a claim is barred. b) statute of limitations are state-level laws only. c) statute of limitations are federal-level laws only. d) a legitimate complaint for a performance failure related to a valid contract will be considered even if the statute of limitations has expired.

a

Which of the following is not true about offer revocation? a) an offer can be revoked after the acceptance of the offer but before the signing of the contract. b) an offer can be revoked prior to a stated deadline for acceptance of the offer. c) an offer can be withdrawn any time prior to the proper communication of the offer's acceptance d) once the offeror has been notified of an offer's acceptance, the right to revoke the offer has passed.

a

lacking the essential elements necessary to be legally binding and obligate performance of a valid contract an oral contract to purchase a real property a) unenforceable b) voidable c) void d) valid

a

not on record, not "under seal," and often not intended as binding includes all contracts not considered formal contracts a) parol contracts b) implied contracts c) unilateral contracts d) executory contracts

a

something of value exchanged by the parties can be "good" or "valuable" a) consideration b) lawful objective c) offer and acceptance d) legally competend parties

a

Oftentimes voidable contracts involve which 2 times of people?

a party who is incapable of legally entering into a contract such as a minor or an incapacitated adult

An ___________ is (introduction of new information to a contract prior to its being entered into)

addendum

An __________ is (a change of information contained in an existing contract)

amendment

Contracts can be modified by the use of addenda and amendments. Which of the following statements is correct regarding their use? a) amendments are for introducing new information to unsigned contracts while addenda are used for the change of existing information in signed contracts B) addenda are for introducing new information to unsigned contracts while amendments are used for the change of existing information in signed contracts c) amendments can be used for either the addition of new information or the change of existing information d) addenda can be used for either the addition of new information or the change of existing information

b

Which of the following is NOT an example of an express contract? a) julie obtains a loan from her bank to finance her home improvement plans b) jeremy sits down for a shoe shine on the town square over lunch c) derrick signs a 3 year modeling contract offered him by a hollywood talent agency d) mr shelton calls peter on the phone and offers him $25 to haul away the debris from his yard

b

Which of the following is NOT true of the statute of frauds? a) it applies to the conveyance of real property b) it has to do with the statutory time limit of enforcement of agreement terms c) it is a state-level law d) it says the certain contracts must be in writing to be enforceable

b

Which of the following is NOT true regarding contract interpretation by the courts? a) they will give priority to handwritten or typewritten words in a fill in the blanks or preprinted contract b) they will repair an invalid contract if possible c) they will apply the four corners rule d) they will interpret any ambiguity in favor of the party NOT responsible for the construction of the contract

b

a contract that does not require any illegal activities or outcomes a contract that adheres to state and federal laws a) consideration b) lawful objective c) offer and acceptance d) legally competend parties

b

eating a meal at a restaurant prior to paying for it a contract created by the actions of the parties a) parol contracts b) implied contracts c) unilateral contracts d) executory contracts

b

potentially valid contract wherein one or more parties have the right to rescind a contract entered into with a minor a) unenforceable b) voidable c) void d) valid

b

Why do unilateral contracts lack mutuality?

b/c one party is obligated from the start and the other has the option to accept the terms of the agreement

__________ is an agreement in which both parties make a promise to perform the actions specified in the contract

bilateral contract

Which contracts are the best choice in the business world?

bilateral contracts

In a bilateral contract, what kind of obligations are created? a) solitary obligations b) double obligations c) reciprocal obligations d) unenforceable obligations

c

Which of the following is an example of an executory contract with a set end date? a) an equipment lease where the user pays rent on the equipment being borrowed b) an automatically renewing apartment lease contract where the tenant pays rent in exchange for living quarters c) a rent-to-buy lease where the tenant can exercise an option to buy the property at the conclusion of the lease period d) a cable tv package subscription where the customer pays a monthly fee for access to programming

c

Which of the following scenarios constitutes acceptance of an offer? a) sue offers to buy the property for $10,000 less than the asking price b) ralph agrees to the buyer's request to include the refrigerator, washer, and dryer if the buyers will increase their offer by $1000 c) beto agrees to the terms and conditions of the buyer's counteroffer d) jon agrees to the seller's terms and offer to buy the property contingent on his being able to get financing

c

Which of these is NEVER true about an unenforceable contract? a) it has (or had) the potential of being a valid contract b) its enforcement is barred by some attribute of the contract or technicality of law c) it be completed if both parties are compelled d) it can be fulfilled if both parties are willing

c

a meeting of the minds the full and unconditional agreement to proposed terms a) consideration b) lawful objective c) offer and acceptance d) legally competend parties

c

invalid without legal effect a) unenforceable b) voidable c) void d) valid

c

reward offers, contests, and commissions a two party contract where one party makes a promise a) parol contracts b) implied contracts c) unilateral contracts d) executory contracts

c

__________ something valuable that each party exchanges in order to demonstrate that they agree to the contract's terms.

consideration

________ is a legally enforceable and binding agreement between parties wherein a promise to do or not do something is given in exchange for consideration.

contract

According to current Florida law, it is considered the practice of unauthorized law for a broker to attempt to ____________ (has to do with creating contracts)

create or draw up certain real estate contracts from scratch

To describe a contract as "executory" is to: a) describe its nature or purpose b) define it as performance based c) indicate it can be terminated d) identify its stage of existence

d

What is fair to assume when talking about the discharge of contracts? a) that the contracts being discussed are both executed and invalid (or thought to be) b) that the contracts being discussed are both executed and valid (or thought to be) c) that the contracts being discussed could be valid or invalid d) that the contracts being discussed are both executory and valid (or thought to be)

d

What phrase, commonly used in conjunction with an offer, indicates that the offer comes with an expiration date? a) response is essential b) the essence of the offer c) it is time to respond d) time is of the essence

d

Which of the following can be drawn up by a real estate licensee in Florida? a) mortgages b) deeds c) promissory notes d) option contracts

d

Which of the following describes a contract possessing the essential element of lawful objective? a) a contract that focuses on adherence to state laws rather than federal laws b) a contract that focused on adherence to federal laws rather than state laws c) a contract that adheres to the wishes of the parties without concern to state or federal laws d) a contract that adheres to both state and federal laws

d

a signed sales contract at any point prior to closing a contract that has not yet been fully performed a) parol contracts b) implied contracts c) unilateral contracts d) executory contracts

d

an attorney-in-fact representing an incapacitated individual in a contract an individual who has reached the age of majority and is of sound mind a) consideration b) lawful objective c) offer and acceptance d) legally competend parties

d

binding on all parties possessing all the essential elements to be legally enforceable a) unenforceable b) voidable c) void d) valid

d

________ unreasonable delay or negligence in asserting or defending one's rights can create a legal bar to equitable relief if a delay or negligence has importantly affected the status of the person responsible for the violation. (use it or lose it rule.

doctrine of laches

____________ in real estate is allowed and supported through multiple state and federal acts.

electronic contracting

__________ is a contract in which all terms have been fulfilled by all parties.

executed contract

________ is a contract that has not yet been fully performed.

executory contract

___________are oral and written contracts in which the parties explicitly state or express their intentions and their expectations regarding the contract and the exchange of promises.

express contracts

___________ is a term you'll hear for a promise to NOT do something

forbearance

The courts will take into consideration only that which appears in the written document. This is known as the _________

four corners rule

What is an example of an implied contract?

going to a restaurant and they provide you food. the promises aren't written down but they understand

Offer and acceptance is another way to describe the __________ that has to occur for a valid contract to come about.

meeting of the minds

________ speaks to the complete and unreserved agreement of terms and conditions, whereas __________ focuses on the fact that the agreement was arrived at as a voluntary act of good faith.

offer and acceptance reality of consent

__________ is known as the party receiving the offer

offeree

_________ is known as the party making the offer

offeror

Informal contracts are also known as __________

parol contracts

________ are usually orally created contracts or the oral modification of written contracts.

parol contracts

__________ is the legal concept that says that oral evidence can be used to support a written contract but can NOT be used to contradict one — particularly a written contract that is clearly intended to be the final expression of the agreement.

parol evidence rule

What is a subset or component of offer and acceptance?

reality of consent

What is good consideration?

something such as love and affection

________ is a state-level law that requires certain types of contracts to be set out in writing to be enforceable.

statute of frauds

_________ has to do with state and federal laws establishing time limits for bringing certain kinds of legal actions.

statute of limitations

What is the main difference between statute of limitations vs doctrine of laches?

statute of limitations depend on the statutory time limit while doctrine of laches depend on the court's discretion,.

For Florida written contracts, the statute of limitations is _______

5 years

Reward offers, contests, and commissions are common types of ________ contracts

unilateral

A wanted poster or a lost dog poster is an example of what type of contract?

unilateral contract

Which sort of contract has 2 parties but 1 promise?

unilateral contract

________ is one in which one party (the offeror) makes a promise in exchange for a reciprocal act on the part of the second party (the offeree).

unilateral contract

From inception, the stipulations and conditions in a _______ contract can not be legally enforced.

void

What is the main difference from a void contract and a voidable contract?

void contracts are unenforceable from the start, but a voidable contract requires a party to disaffirm the contract before it is rendered unenforceable.

Formal contracts must always be _________

written

the doctrine of laches is most similar to _________

The statute of limitations

T/F a written contract can also be an informal contract

True

What are the 4 legal categories of contracts?

Valid Void Voidable Unenforceable

____________ are potentially valid contracts where at least one party has the option to rescind or terminate the contract without penalty.

Voidable contracts

The parties reverse roles: The offeree becomes the offeror and the offeror becomes the offeree. The original offer becomes null and void. These two things occur when?>

When a counteroffer is created

T/F. If a contract is a combination of written and oral, the written parts have the statue of limitations of 5 years and the oral part of 4 years.

true

T/F. If an offeree says that they agree to an offeror's offer, but only on the contingency of them getting financing, the roles switch and a new counteroffer was made.

true

T/F. if anyone under the age of 18 enters into a contract, the contract is considered voidable at the option of the minor but NOT the other party.

true

What type of contract is technically valid but without legal remedy?

unenforceable

For Florida contracts for specific performance, the statute of limitations is _________

1 year

What are the four options regarding an offer?

1. accept it 2. counter it. 3. ignore it 4. reject it

What are the 8 ways that an offer can be terminated?

1. acceptance 2. counteroffer 3. rejection 4. expiration 5. revocation 6. death or mental incapacity 7. destruction 8. improper acceptance

What are the 4 pairs of classifications (8 total contracts) of contracts?

1. formal vs informal 2. express vs implied 3. unilateral vs bilateral 4. executory vs executed

What are the 2 primary classifications on how a discharge (termination) of contracts occur?

1. operation of law 2. acts of the parties

For Florida oral contracts, the statute of limitations is _______

4 years

What does full performance mean when it comes to the termination of a contract?

Full performance typically means both parties did what they were supposed to do and received what they had hoped to receive. And, once all obligations are performed, a contract is considered executed and discharged.

What does statute of limitations mean when it comes to the termination of contracts?

In the event a party to a contract defaults in their performance, the wronged party must bring a lawsuit against the defaulting party within the time frame as set forth by the statute of limitations. The right to recovery for damages is lost once that date passes.

What are the 4 essential elements of a contract?

Legally competent parties Offer and acceptance Lawful objective Consideration

__________ is one that has (or had) the potential of being a valid contract, but its enforcement is barred by some attribute of the contract or technicality of law.

unenforceable contract

Essentially, Michael is guaranteeing Josh that the car will run well and Josh will not have to spend a substantial amount of money to maintain the car. However, Michael knows that the car has a faulty alternator and that if the alternator malfunctions, the car will not be able to start up. What is missing from this contract?

Offer and acceptance since the mechanic did not provide john with accurate information since he misrepresented

What are the 3 common restrictions on enforcement of valid contracts:

Statute of frauds Statute of limitations Doctrine of laches

Courts typically favor who when it comes to ambiguity in contracts?

the party not responsible for making the contract

What does it mean for a contract to be discharged by operation of law?

they are discharged as result of the application of law without regard to the desires, intent, or agreement of the parties

What would the exception be for courts to take action in an executory contract?

those ongoing or long term executory contracts

If an offeror makes an offer with an expiration date, it will likely also contain the magical phrase _________

timing is of the essence