Chapter 1
A contract may be discharged under substantial performance when
The answer is one party does not complete all the details exactly as the contract requires but has to a large extent performed on the contract, which may be enough to force payment.
Your rebellious 15-year-old daughter signs a lease for her own apartment. You convince her to cancel it, which she does. You notify the apartment owner not to bother to try to enforce the lease because it has been terminated by
The answer is operation of law. If a contract is voided by a minor, it has been canceled/terminated by operation of law.
In Texas, the statute of limitations is two years for
The answer is oral contracts for a lease of less than one year. Under the statute of frauds, leases for one year or less do not have to be in writing. An oral contract for the lease of a property for one year or less has a statute of limitation of two years.
__________ means doing what the contract requires, and ________ means not to do a specific thing.
The answer is performance, forbearance.
Which of the following is NOT a type of recognized system for arriving at a legal description?
The answer is range and trajectory. All the others are recognized systems to develop legal descriptions. Metes and bounds and the rectangular survey system are generally used for larger parcels that have not been subdivided, whereas lot and block and subdivision plat are used most frequently for developed property in urban areas.
Which method of legal description divides property into a variety of smaller parcels, including sections, each of which has 640 acres?
The answer is rectangular survey system. The rectangular survey system divides property into a variety of smaller parcels, including sections. The other systems do not make such a division.
The real estate agent representing the seller should encourage the seller to
The answer is require as much earnest money as can be negotiated with the buyer.
With a verbal agreement, you lease your garage to your neighbor from January 1, 2018, to September 1, 2018, to store his car. He promises to pay the rent in a lump sum no later than January 3, 2018. He doesn't pay. How long do you have to file suit to collect?
The answer is January 2, 2020. The statute of limitations on an oral contract is two years from the date of breach.
A buyer and a seller enter into a contract using the Farm and Ranch Contract, which is one of TREC's six promulgated contracts. The effective date of the contract is June 20, and the buyer has 8 days to fulfill a duty under the contract. By when must the buyer complete the duty?
The answer is June 28 at midnight.
Once a contract has been agreed upon and signed by all parties
The answer is changes must be addressed through the use of an amendment. Once the original contract has been ratified (signed by all parties), any changes need to be addressed in an amendment.
When a contract contains all of the essential elements that make it legally sufficient or enforceable and is binding in a court of law, it is
The answer is valid. A valid contract meets all of the required essential elements (i.e., offer and acceptance, consideration, legal purpose, consent, and legal capacity).
When a contract lacks one of the essential elements of a legal contract it is
The answer 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.
In Texas, the statute of limitations for an oral contract for a lease of less than one year is
The answer is two years.
What is the statute of limitations for an oral contract for the six-month lease of a property?
The answer is two years. Under the statute of frauds, leases for one year or less do not have to be in writing. An oral contract for the lease of a property for one year or less has a statute of limitation of two years.
A person approaches an owner and says, "I'd like to buy your house." The owner says, "Sure" and they agree on a price. What type of contract is this?
The answer is unenforceable.
When a contract appears to be valid on the surface but neither party can sue the other to force performance it is
The answer is unenforceable. An unenforceable contract is an agreement that had all six elements at the time it became an executory contract but, due to a change in conditions, no longer meets the requirements of law and no longer can be upheld by a court.
In which paragraph of the promulgated contracts does the term time is of the essence appear?
The answer is Option to Terminate. The other choices involve specific dates or computable dates but do not contain that phrase.
He promises to marry her. She promises to marry him. This is an example of
The answer is a bilateral contract. Because a promise in exchange for a promise is a valid contract, this is a bilateral contract.
The main difference between an amendment and an addendum is that an amendment
The answer is a change to the existing content in the contract.
An amendment
The answer is a change to the original agreement.
The statute of limitations is four years for which of the following?
The answer is a contract for the sale of real estate.
A contract may be discharged for any of the following reasons EXCEPT
The answer is a unilateral decision by either party to terminate the contract.
The second paragraph of the TREC-promulgated Amendment form deals with what type of amendments?
The answer is additional itemized repairs. The other answers are covered by other paragraphs in the form.
Which of these addenda includes "time is of the essence"?
The answer is all of these. The six promulgated contract forms and four addenda include time is of the essence: Addendum for Sale of Other Property by Buyer, Addendum for Back-Up Contract, Third Party Financing Addendum, and Short Sale Addendum.
A contract is classified as bilateral if
The answer is all parties to the contract exchange binding promises. A contract is said to be bilateral if both parties to the agreement make promises to each other to do something (promise for a promise).
Which of the following is TRUE regarding amendments and addenda?
The answer is an amendment is completed after a contract has been executed, but addenda are completed at the same time as the sales contract.
A contract can be discharged or terminated
The answer is by impossibility of performance.
A buyer and a seller enter into a contract using the One to Four Family Residential Contract, which is one of TREC's six promulgated contracts. The effective date of the contract is February 4, and the seller has 4 days to fulfill a duty under the contract. By when must the seller complete the duty?
The answer is February 8 at midnight.
A seller and buyer have entered into a sales contract, and the seller fails to deliver title to the buyer. This is an example of
The answer is breach of contract. A breach of contract is a violation of any of the terms or conditions of a contract without legal reason.
Which of these addenda does NOT include "time is of the essence"?
The answer is Addendum for Coastal Area Property.
According to the Texas legislature, a contract involving the sale of a residence that will take place more than 180 days after the execution of the contract is
The answer is an executory contract.
A legally enforceable agreement under which two parties promise to do something for each other is classified as a(n)
The answer is bilateral contract. A contract is bilateral if both parties to the agreement promise to do something in exchange for the other's promise to do something.
The statute of limitations in Texas is
The answer is four years for a written contract.
The statute of limitations for a written contract for the sale of real estate in Texas is
The answer is four years.
The two-year statute of limitations under the Texas Deceptive Trade Practices Act, begins to run
The answer is from the date when the complaining party discovers or should have discovered the deceptive act.
If the buyer gives notice (without legal justification) that he will not close the purchase of the property and is terminating the contract, is the seller out of luck?
The answer is no, termination of the contract does not terminate the seller's remedies under the contract, only the seller's obligation to sell.
Which of the following is necessary for a valid legal contract?
The answer is lawful objective.
In terms of contract law, one description for a 15-year old would be
The answer is legally incompetent. Eighteen years old is the minimum age to be legally competent to sign a binding contract in Texas; otherwise, you are legally incompetent.
A contract that complies with all the basic requirements may still be either void or voidable. To be valid, the contract must have
The answer is mutual agreement.
The contract is signed by buyer and seller, and the earnest money check is delivered to you (as escrow agent) on Friday afternoon. You decide to take Monday off. You come in Tuesday and review the contract, noting that it has been signed and you have had the earnest money since Friday. Is this a concern?
The answer is no, because not only does the day of the effective date of the contract not count, the second business day is Tuesday. Monday is the first day, and Tuesday is the second business day so you are okay so long as you get the check deposited on Tuesday.
Is a provision in the contract stating that a certain task must be completed within a "reasonable time" a good idea?
The answer is no, because the term is open to so much interpretation.
The painter contracts to paint the exterior of the home for $1,750 plus the cost of paint and any other necessary materials. About three-fourths of the way through the job, the contractor breaks his leg and can't finish. The owner offers to pay the contract price less deductions for the cost of having the job completed by another painter, and the original painter accepts the offer. The contract has been discharged under the principle of
The answer is substantial performance.
A contract becomes fully executed when
The answer is the parties have fulfilled the promises made in the agreement. When all acts have been performed, the seller has delivered the general warranty deed, and the buyer has accepted it, the contract will become fully executed.
Which of the following is TRUE for the statute of limitations for contracts for the sale of real estate and oral contracts for leases of less than one year?
The answer is the statute of limitations is four years for the sale and two years for the lease.
When a contract appears to be valid but may be rescinded or disaffirmed by one or both parties based on some legal principle it is
The answer is voidable.