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51 Cards in this Set
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Contract |
A legally enforceable and binding agreement between parties where in a promise to do or not to do something is given in exchange for consideration. |
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Addendum |
Introduction of new information to a contract prior to it being entered into. |
Buyer wants a swingset included in the purchase of the home. Her broker adds an addendum to the purchase contract that includes the swingset. Because the swingset was not a part of the original signed contract and addendum is needed. |
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Amendment |
Considered to be correcting or approving the existing contract document. Parties to the contract must date and sign any addendum or amendment created. |
When the property inspection revealed needed repairs to the gutters, the buyer insisted that the seller either make the repairs or reduce the purchase price by the cost of those repairs. since the repair of the gutters or the reduction in the price we’re not a part of the original signed contract an amendment addressing the requested changes to existing terms need to be made. |
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Permitted contracts |
-listing agreement -buyer broker agreement -sale and purchase contracts -option contracts |
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4 corners rule |
The court will take into consideration only that which appears in the written document. |
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The 4 essential elements of a valid contract |
-Legally competent parties -Offer and acceptance -Lawful objective -Consideration |
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Offer and acceptance |
Another way to describe the meeting of the minds that has to occur for a valid contract to come about. Also known as mutual agreement or mutual assent, it’s the fully agreed-upon exchange of promises by the parties. |
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Reality of consent |
Not to be confused with offer and acceptance. Focuses on the fact that the agreement was arrived at as a voluntary act of good faith. |
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Consideration |
Something valuable that each party exchanges in order to demonstrate that they agree to the contract terms |
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Good consideration |
Can be acceptable in exchange for valuable consideration. When this happens the term gift is used to describe the conveyance or exchange. |
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4 legal categories |
Once a contract has been created it falls into one of four legal categories: -Valid -Void -Voidable -Unenforceable |
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3 common restrictions on enforcement of valid contracts |
1) Statute of frauds 2) Statute of limitations 3) Doctrine of laches |
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The parol evidence rule |
The legal concept that says that oral evidence can be used to support a written contract but cannot be used to contradict one - particularly a written contract that is clearly intended to be the final expression of the agreement. |
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Doctrine of laches |
Another legal principle that courts used to deny data claims. Relies on the court’s discretion as to wether or not a plaintiff has waited too long to make a claim. |
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Informal contracts |
Also Known as parole contracts. Almost always oral agreements. Informal contracts are those not under seal, not on record and often difficult to prove or enforce. |
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Express contracts |
Oral and written contracts in which the parties explicitly express their intentions and expectations regarding the contract and the exchange of promises. All terms have been identified and agreed to. |
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Implied contracts |
Sitting at a barbershop is a form of an implied contract because you get the service first and then you’re expected to pay for it. A doctors visit and a taxi cab is the same way. |
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Bilateral contract |
An agreement in which both parties make a promise to perform the actions specified in the contract. Typically the contracts of choice for the business world. |
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Unilateral contract |
In a unilateral contract there are 2 parties but 1 promise. 1 party makes a promise in exchange for reciprocal act on the part of the second party. |
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Executed contract |
A contract and which all terms have been fulfilled by all parties. An example would be when I bought the QR code keychain. I asked the lady to make it for me and then I payed her when she gave it to me. |
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Executory contract |
A contract that has not yet been fully performed. Two elements of executory contracts: 1) A binding contract on multiple parties. 2) 1or more of the parties has yet to perform their contractual duties. |
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On going executors contracts without an end date |
- A rental lease where the tenant is obligated to make periodic payments in exchange for living quarters. - An equipment lease where the user must pay rent for the equipment as long as it is being borrowed. |
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On going executory contract with an end date |
- A rent to buy lease where the tenant exercises an option to buy the property. - A car lease. |
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Operation of law |
When contracts are said to be discharged by operation of law, it means that they are discharged as a result of the application of law without regard to the desires, intent, or agreements of the parties |
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Merger |
Discharge of contract by Merger is based on the idea that the original contract can be merged into a new agreement, and that the original agreement disappears in the process. |
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Mutual agreement |
A contract can be discharged by mutual agreement of the parties but it needs to be formalized. Mutual agreement differs from the cancellation of a contract in that it returns the parties to their pre-contract positions. Because of this any money that exchanged hands must be returned. |
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Cooling offperiod |
The term cooling off period refers to the window of time within which a party has the right to rescind specific types of contracts for any reason and without liability. |
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Novation |
A mutual agreement of the parties to replace an existing contract with a new one. |
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Assignment |
An original party to a contract transfers their rights and duties to a new party. |
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Accord and satisfaction |
Parties agree to discharge the original contract in favor of a new one. Wherein accepted performance is often less than what was initially owed. |
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Breach of contract |
A party to an agreement who does not perform according to the terms and conditions of the contract. |
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Liquidated damages |
When a contract stipulates what damages are to be paid in the event of breach of contract. |
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Agency law |
There are laws that govern the practice of agency. Agency law covers: - The roles of broker and client. - The duties of the agent. - The scope of the agents authority. |
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Contract law |
Contract law governs the practice of using contracts, including: - The validity of a contract. - The legal form of a contract. - How a contract can be terminated. |
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Service contract |
Must have: - Expiration date. - Property description. - Listing price & terms. - Broker compensation. - Principal signatures. The can’t haves - Provision requiring cancellation notice in addition to the expiration date. - Automatic renewal provision. |
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Listing agreement |
What service contracts between brokers and sellers usually takes the form of. A seller authorized the broker and any affiliated sales associates to assist the seller in the sale of real property. |
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Not promulgated |
As is the case with all real estate service contracts, Florida does not promulgate listing agreements. |
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Performance |
The most desirable way to terminate a service contract is through the fulfillment of its purposes - such as property being bought or sold. |
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Listing presentation |
Your opportunity to pitch yourself and your services to a seller. You will also need to present a suggested price range based on your knowledge of the local market. |
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Procuring cause |
Individual actions that brought a ready, willing and able buyer to the transaction. |
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Open listing |
A no exclusive listing agreement that gives multiple brokers the right to sell the property. Provides a commission to a broker only if their activities being about a sale. |
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Exclusive-right-of-sale-agreement |
States that as long as the property is sold within the stipulated time frame of the contract, the listing broker named in the contract will receive a commission for their role as an agent. It does not matter how the sale is secured, wether by the named listing broker, another broker, or by the owner finding a buyer in there own. |
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Exclusive agency listing |
- Releases the owner from any obligation to Paula a commission in the event that the owner secured the sale of the property. - The seller agrees to list the property with only one broker during a specified listing term. - The named listing broker is owed commission if the property is sold by anyone other than the owner. |
This can be demotivating because the license holder might feel the seller is not fully committed to them or is actually competing against them. |
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State requirements pertaining to listing agreements |
- Listing agreements must have an expiration date. - Prohibits the use of provision or clause that would require the seller to declare there intent to cancel the listing at expiration. - Automatic renewal clauses are forbidden in listing agreements. - The seller must receive a copy of the listing agreement within 24 hours of its execution. |
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Listing price |
The listing price clause sets the listing price of the property, which is the sellers desired gross sale price. Florida law requires that a listing agreement contain the listing price and terms. |
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Disclosure that all listing agents are required to make to their seller clients include: |
-All offers made on the property -Material facts about a property that are not easily observable and which could influence the property value -Any conflicts of interest the broker might have -Any updates on offers and counteroffers |
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Compensation clause different forms of compensation: |
The listing agent is awarded a percentage of the final sales price. The listing agent is awarded a set dollar amount. The seller and listing agent write in another compensation option, such as a lifetime supply of beets and a firm handshake. |
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Protection period |
A limited time frame after an agency agreement ends during which an agent can be owed compensation under certain circumstances. |
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Shane is a listing agent hoping to sell a single-family home. He knows that he will earn compensation if he procures the buyer for the home, but he will not earn compensation if another broker or the owner procures the buyer. What type of listing agreement is this? Open listing |
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Jillian, a seller, has signed an exclusive right-of-sale listing with Carly, a sales associate. Which of the following statements is MOST TRUE? |
Carly will receive compensation as long as someone agrees to purchase Jillian’s property within the listing agreements term. |
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An option contract is unilateral, with promises being made by: |
Optionor (Seller) |
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