chapter 19 practices

If a property was sold for $100,000 and at the time of the total breach by buyer, the property was worth $60,000, then the seller - as the non-breaching party - would presumably be entitled to:

$40,000 in losses.

Breach of contract.

A breach of contract is a failure to perform according to the terms of the agreement. Also called default, a breach of contract gives the damaged party the right to take legal action.

Define breach of contract.

A breach of contract is a failure to perform according to the terms of the agreement. Also called default, a breach of contract gives the damaged party the right to take legal action.

Performance

A contract terminates when fully performed by the parties

Rescission

A damaged party may rescind the contract. Rescission cancels the contract and returns the parties to their pre-contract condition, including the refunding of any monies already transferred.

Suit for damages

A damaged party may sue for money damages in civil court.

There are two categories of special damages which a non-breaching party could recover. Both of these damages MUST satisfy what type of test?

A foreseeability test

liquidated damages.

A predetermined amount of money stipulated in the contract to be the total amount of compensation the non-defaulting party should receive upon breach by the other party

Assignment and delegation

A real estate contract that is not a personal contract for services can be assigned or delegated to another party unless the terms of the agreement specifically prohibit assignment or delegation. Assignment transfers rights and delegation transfers duties.

Describe assignment.

A real estate contract that is not a personal contract for services can be assigned to another party unless the terms of the agreement specifically prohibit assignment. Sales contracts are assignable because they involve the purchase of real property rather than a personal service.

What occurs where one party refuses to perform his or her side of the bargain on the due date or performs incompletely?

Actual breach

Suit for specific performance.

An attempt to force the defaulting party to comply with the terms of the contract.

Infeasibility

An otherwise valid contract can be canceled if it is not possible to perform.

What is a failure to perform according to the terms of an agreement called?

Breach of contract

Default of a real estate contract is also called "material breach of contract" or "breach of contract."

Contract law states that a material breach of contract is an irreparable break in a legally binding contract.

Forfeiture.

Forfeiture requires the breaching party to give up something, according to the terms of the contract

In regard to special damages, what is the foreseeability test?

In the context of special damages due to a breach of contract, foreseeability means such damages were within the contemplation of the contract when it was made.

Define liquidated damages.

Liquidated damages are a predetermined amount of money stipulated in the contract to be the total amount of compensation the non-defaulting party should receive upon breach by the other party.

Mutual agreement.

Parties to a contract can agree to terminate, or renounce, the contract. Discharging a contract by mutual agreement is called rescission. Accord and satisfaction occur when one party agrees to accept less than the original obligation outlined in the contract. The accord is the agreement between the parties to discharge the obligation and the satisfaction is the consideration provided.

List three ways a contract may be terminated.

Performance Infeasibility Mutual Agreement Revocation Operation of Law Assignment and Delegation Breach of Contract - Default

Discharge of a contract, also called cancellation and termination, may occur for any of the following causes.

Performance. Infeasibility Mutual agreement. Revocation. Operation of law. Assignment and delegation. Breach of contract

List the four breach of contract remedies a damaged party can seek.

Recession Forfeiture Suit for damages Suit for specific performance

Sometimes a contract does not accurately reflect the intentions of the parties because of some mechanical or clerical error in the document. When this happens what legal action is necessary to correct or modify the contract?

Reformation

Explain renunciation.

Renunciation occurs where a party refuses to perform his obligations under the contract. It may be either express or implied.

The damaged party may elect the following legal remedies.

Rescission. Forfeiture. Suit for damages. Suit for specific performance

What is revocation?

Revocation is cancellation of the contract by one party without the consent of the other. While all parties have the power to revoke, they may not have a defensible right. In the absence of justifiable grounds, a revocation may not relieve the revoking party of contract obligations.

Revocation.

This is cancellation of the contract by one party without the consent of the other

Operation of law.

This would include restrictions outlined in the Statute of Limitations and other legal considerations.

Most real estate contracts have expiration dates and closing dates. An expiration date usually applies to the final date by which the other party:

accepts the offer.

Contract obligations may be absolute or:

conditional.

When a contract states the total amount due to a damaged party in the event of a breach, the compensation is known as:

liquidated damages.

Anticipatory breach

occurs where one party announces, in advance of the due date for performance, that he or she intends not to perform on his or her side of the bargain. The innocent party may sue for damages immediately when the breach is announced.

Actual breach

occurs where one party refuses to perform his or her side of the bargain on the due date or performs incompletely.

The standard measure of loss of bargain damages, for a total breach, would encompass the difference between the agreed contract price and the market value of the property on the date:

of breach.

Accord and satisfaction is another way to discharge a contract by mutual agreement that occurs when one party agrees to accept less than the original obligation outlined in the contract. The accord is the agreement between the parties to discharge the obligation and the satisfaction is:

the consideration provided.