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37 Cards in this Set

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contract
a legally enforceable agreement to do (performance) or not to do (forbearance) a specific thing.
performance
A contractual agreement or promise to do a particular act
forbearance
Refraining from taking action
default or breach
who enter a contract and fail to perform ___________ may be sued by the other party or parties to the agreement. The nondefaulting party may ask the court to enforce specific performance or the nondefaulting may try to prove to the court that economic damages were created by the default and seek money damages to compensate the loss.
valid
An agreement that meets all of the legal requirements of a contract.
competent parties
A party who does not have legal capacity (incompetent party) may not be held to the terms of an agreement. a person who is at least 18, sane, and sober
minor
(younger than 18) is classified as voidable; that is, it can be set aside at the sole option of the minor party. If the minor chooses to uphold and fulfill the terms of the agreement, the contract is binding.
attorney in fact
serves in a fiduciary capacity to the one who makes the appointment. the signature binds a party just as effectively as the party's own signaturebinds a party just as effectively as the party's own signature
corporate resolution
passed at a meeting of the board of directors may sign a contract for and on behalf of the corporation. It may be a waste of a licensee's time to attempt to market and negotiate corporately owned real estate prior to obtaining a copy of the corporate resolution for the licensee's file and subsequently for the title company that will be asked to close the transaction
consideration
To be valid, a contract must specifically identify that something, usually money, is being given in exchange for something else. Texas courts have clearly provided that a promise given in exchange for a promise is adequate ____________ to bind a purchase agreement.
option contract
the property owner gives a promise and the purchaser gives money to bind the agreement
mutual agreement
the property owner gives a promise and the purchaser gives money to bind the agreement
lawful objective
concerns the provisions of an agreement, which must call for lawful activity. A provision that does not comply with federal, state, or local law cannot be upheld by a court. Suppose a tenant signs a lease stating that if the tenant fails to pay the rent, the landlord may enter the premises, seize all of the tenant's personal possessions, and immediately sell them to satisfy the rent obligation
void
An oral agreement of sale is ______ and therefore unenforceable in Texas.
binding executory contract
one does not have a ________until (1) a written offer has been made; (2) a written acceptance has occurred; and (3) the offeror has been notified of the acceptance. The only exception to the in writing rule is a lease for one year or less. All other real estate agreements must be in writing to be enforceable
contain a legal description
that is of such certainty and accuracy that one can go to and identify it. The two commonly used legal descriptions are (1) reference to a recorded plat (lot, block, section number, subdivision name); and (2) metes and bounds
unenforceable contract
an agreement that had all the 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 of law
voidable
set aside at the option of one of the contracting parties).
tort
an act that damages another individual and gives rise to legal action.A property owner may consider the license holder's failure to present an offer in a timely manner a tortious interference with his or her ability to sell the property.
A seller presented with a written offer may
accept it,
reject it,
counter it, or
do nothing—that is, ignore it
factors that may cancel an offer
lapse of reasonable time,
destruction of the physical improvements, and
death or insanity of the offeror
executory contract
When an offeror has presented an offer to a seller, the offeree has accepted it, and the offeror has been notified of the acceptance. one that is fully negotiated and signed by the parties. The parties still have obligations to fulfill before all things called for in the agreement have been performed
executed contract
When closing and funding occur, the contract is considered. one in which all parties have fulfilled all promises made in the agreement. When the seller has delivered the deed, received the proceeds, and granted possession to the purchaser, a fully executed contract exists
If one of the parties defaults or violates the agreement (breach of contract), the non-defaulting party may
sue the defaulting party for specific performance,
sue the defaulting party for money damages, or
accept the earnest money as liquidated damages as the sole remedy
bilateral contract
involves a promise in exchange for a promise. The seller in a purchase agreement agrees to deliver clear title and the buyer agrees to deliver money
unilateral contract
involves a promise in exchange for an act. The seller agrees to pay the listing broker when and if the broker produces a ready, willing, and able buyer
Independent Contractor Agreement
bilateral agreement that defines the working relationship between salesperson and sponsoring broker
lease
bilateral agreement that defines what the tenant may and may not do during the term of the leasehold and what the property owner may and may not do during the term of the leasehold
option to purchase
unilateral agreement that binds the property owner and prevents the property owner from selling the property to another party but does not bind the prospective purchaser to purchase
option to terminate
a unilateral agreement that binds the property owner to release the prospective purchaser from all obligations if the buyer elects to walk away during the defined option period
listing agreement
may be either a unilateral agreement or a bilateral agreement although most listing agreements are for an exclusive-right-to-sell agency and involve an exchange of promises and obligations. Only a nonexclusive or open listing may possibly be a unilateral agreement
buyer representational
a bilateral agreement that defines the working relationship between a buyer and the buyer's agent and creates an exclusive agency relationship
purchase agreement
a buy/sell agreement is always a bilateral agreement that calls for each of the parties to perform certain actions and/or fulfill certain promises defined in the agreement
novation
a replacement contract
time is of the essence
A real estate broker or salesperson should never add the words. If a party wants to add the words, that party and the other party should be advised to seek the counsel of a competent real estate attorney before doing so.
assignor
is the party who transfers a right
assignee
is the party to whom the right is assigned