Realex Ch.5

Front 1

Contract

Back 1

Voluntary agreement legally competent parties to perform or refrain from performing some legal act for some consideration.

Front 2

Mutual assent

Back 2

Mutual agreement, mutual consent. Offer and acceptance. Must be in writing to be enforceable.

Front 3

Duress

Back 3

Use of force, blackmail, extortion. Contract must be free of.

Front 4

Menace

Back 4

Threat of duress

Front 5

Undue influence

Back 5

Invalidates a contract

Front 6

Mutual mistake

Back 6

Can void a contract. But always ask for contingencies. They will not void a contract.

Front 7

Offer does not become a contract until...

Back 7

1. Accepted by offeree and 2. Acceptance is communicated back to offeror

Front 8

Offeree’s 3 choices for received offer

Back 8

Acceptance, rejection, countered.

Front 9

Mirror image

Back 9

Offer accepted without change

Front 10

Legally competent parties

Back 10

Sound mind, sound body. Not been adjudicated to be incompetent.

Front 11

Can non-profit enter a contract?

Back 11

No, not considered legally competent. But corporations, partnerships, LLC’s and govt agency can.

Front 12

Executory

Back 12

Contract in period from signing to completion

Front 13

Executed contract

Back 13

All performance has been completed.

Front 14

Equitable title

Back 14

The buyer has personal property interest in the property sd during its executory period.

Front 15

Legal act

Back 15

No valid contract can ever exist for an illegal purpose.

Front 16

Consideration

Back 16

Anything of value to the other party.

Front 17

Detriment

Back 17

Consideration given up by the buyer

Front 18

Benefit

Back 18

Consideration received by a seller.

Front 19

Valuable consideration

Back 19

Has value in and of itself ($)

Front 20

Contract based on good consideration

Back 20

Love and affection, or a promise to refrain from filing a lawsuit

Front 21

Earnest money is what?

Back 21

A consideration, $ to show buyer is serious.

Front 22

Valid contract

Void contract

Back 22

All elements are present and enforceable again either party in court.

Lack an essential element.

Front 23

Enforceable

Back 23

Terms of valid contract are enforceable in court by all parties. Oral contract is legal but not enforceable.

Front 24

Parol evidence rule

Back 24

Oral evidence. Can only be used to clarify ambiguity in the meaning of contract wording.

Front 25

Unenforceable

Back 25

Appears to be valid but no longer enforceable in court.

Front 26

Time is of the essence

Back 26

Phrase that indicates the dates in a contract are iron-clad and must be met.

Front 27

Caveat emptor

Back 27

“Let buyer beware “

Front 28

Forbearance

Back 28

Refraining from exercising a legal right. “Just because I exercise forbearance in collecting late fees this time, doesn’t mean I will next time”

Front 29

Expressed contract

Back 29

Most contracts are. All terms are definite and specific either by writing, spoken word or action. The parties express their intent.

Front 30

Expressed contract

Back 30

Most contracts are. All terms are definite and specific either by writing, spoken word or action. The parties express their intent.

Front 31

Implied contract

Back 31

Created by inference based on the conduct of the parties. Broker showing houses over time to buyer, broker may say you owe me b/c it was implied by me showing you houses for so long.

Front 32

Unilateral vs. bilateral contract

Back 32

Unilateral, only one party performs. (Option contract) Bilateral two parties perform. (A promise for a promise)

Front 33

Listing contract

Back 33

Employment contract with a seller, landlord, buyer or tenant to provide real estate services.

Front 34

Buy-sell or sales contract

Back 34

Between buyer and seller. Prepared as offer and becomes contract once accepted and offered is notified of acceptance.

Front 35

Option contract

Back 35

Lease with option to buy at end of lease. Option fee.

Front 36

Management agreement

Back 36

Between owner/landlord and broker stating level and scope of property management services.

Front 37

Lease

Back 37

Both contract and conveyance of limited rights of occupancy.

Front 38

Installment land contract

Back 38

Aka contract for deed. Seller-financing contract. Seller retains legal title to property until the buyer completes a certain portion of the payments.

Front 39

Contracts may be terminated or discharged by: 3

Back 39

1. Performance 2. Acts of the parties. 3. Operation of law.

Front 40

Termination by full performance

Back 40

Usual and most desirable. Contract considered executed when all parties have completed all promises.

Front 41

Termination by Acts of the Parties

Back 41

1. Alteration 2. Release 3. Assignment 4. Novation 5. Accord and satisfaction

Front 42

Alteration

Back 42

Unauthorized revision to contract.

Front 43

Release

Back 43

Relief from obligations in original contract.

Front 44

Assignment

Back 44

Assign contractual rights and obligations to someone else. May or may not relieve original party of all liability performance.

Front 45

Novation

Back 45

Substitutes a new party in place of an existing contract. Erases liability of original party. (Loan assumption usually by a contract of novation)

Front 46

Accord and Satisfaction

Back 46

New agreement negotiated as a compromise to original contract. (Release of buyer from buy-sell contract for a specified sum other than the earnest $)

Front 47

Termination of Operation of Law: 6 ways

Back 47

1. Bankruptcy 2. Foreclosure 3. Supervening illegality 4. Passage of time 5. Lache 6. Death or incapacity

Front 48

Bankruptcy

Back 48

Has effect of terminating contracts in effect as of the filing date.

Front 49

Foreclosure

Back 49

Owner’s loss of title transferred to the holder of the lien due to failure to comply with some obligation on the part of the owner.

Front 50

Supervening illegality

Back 50

Change in law after the contract date that makes the intended purchase illegal.

Front 51

Passage of time

Back 51

Contracts generally specify an end date. If not, Colorado is 1yr.

Front 52

Lache

Back 52

Equitable doctrine that prevents claiming right or benefit. Because you delayed too long in making the claim. Cannot knowingly let your neighbor build 10ft encroachment on your property only when the construction is finished.

Front 53

Death or incapacity

Back 53

Personal service contract such as real estate listing contract terminate by death of one of the parties. Estate sales and/or lease contracts are not considered personal services and continue onto heirs of deceased.

Front 54

Specific performance

Back 54

Non-homogeneity. So if contract is breached, seller must be sued to get back what is in the contract. Always against seller. Against buyer is optional.

Front 55

Liquidated damages

Back 55

Non-defaulting party may retain some $ as whole compensation for the other party’s breach. Simply just take the earnest $.

Front 56

Compensatory damages

Back 56

Court award of the actual amount of damages suffered due to a contract breach.

Front 57

Punitive damages

Back 57

Sums of $ over and above actual losses set as punishment for the offending party’s behavior.

Front 58

Rescission

Back 58

Take back or cancel. In suit for rescission, court orders both parties placed back in their original positions as if the contract had never existed.