Real Estate - Level 6, Chapter 1 - Contract Law Principles Flashcards

Real Estate - Level 6, Chapter 1 - Contract Law Principles Flashcards good considerationlove and affection earnest moneyis NOT consideration lawful objectivewhen a contract does not require any illegal activities or outcomes

• essential elements of a valid contract 1. Offer and acceptance2. Consideration3. Legally

competent parties4. Reality of consent5. Lawful objective reality of consentfocuses on the fact that the agreement was arrived at as a voluntary act of good faith;whereas, "offer and acceptance" speaks to the complete and unreserved agreement of terms and conditions offer and acceptancea meeting of the minds legally competent parties1. you must be of legal age (18+)2. NOT be mentally incompetent or intoxicated by drugs/alcohol Which of the following describes a contract possessing the essential element of lawful objective?*a contract that focuses on adherence to federal laws rather than state laws*a contract that adheres to the wishes of the parties without concern to state or federal laws*a contract that adheres to both state and federal laws*a contract that focuses on adherence to state laws rather than federal laws a contract that adheres to both state and federal laws what would be an example of a buyer's consideration?$100,000;it would NOT be:*having legally competent parties*getting the contract in writing*the title to real property contractis a legally enforceable and binding agreement between parties wherein a promise to do or not do something is given in exchange for valuable consideration. (Forbearance is a term you'll hear for a promise to NOT do something.) Case Study: Minor Minor MalfunctionsJosh, who is a minor, signs a contract agreeing to purchase Michael's car.In the contract, Michael expressly states that the car is in great condition, meaning that the car does not need any major repairs.However, Michael knew all along that the car had a faulty alternator and that if the alternator malfunctions, the car would not be able to start up.When Josh experiences alternator issues and tells Michael he intends to rescind the contract, Michael tells Josh that it is too late since Josh has already completed and signed all the required paperwork.What should happen?Josh is a minor, not legally competent, the deal was fraudulant - he has the right to rescind.

lawful objectivemeans that the contract cannot require any illegal activities or outcomes.legally competent partiesan individual who has reached the age of majority and is of sound mind Which of the following is an example of reality of consent?*Bob buying Sue's motorcycle "as-is" because she doesn't really know its true condition*Tommy pressuring Candi into leasing his apartment because "something" might happen to her cat if she doesn't*Ralph selling a forged 1904 World's Fair stamp as though it were an original*Tina and Tony purchasing a car by signing a contract that lists the wrong VIN number for the vehicle Bob buying Sue's motorcycle "as-is" because she doesn't really know its true condition What is true about contracts?valuable consideration is exchanged for a promise to either do or NOT do something For there to be a voluntary act of good faith here cannot be any evidence of fraud, misrepresentation, mutual mistake, or misunderstanding - and certainly no undue influence or duress. The parties, of their own free will, and with all the information needed to make a sound decision, voluntarily enter into the agreement.Also known as mutual assent, offer and acceptance is:the fully agreed-upon exchange of promises by the parties offer and acceptancethe full and unconditional agreement to proposed terms offer and acceptance/mutual assentis another way to describe the MEETING OF THE MINDS that has to occur for a valid contract to come about.consideration1. carries a unique meaning when it comes to contracts. In order for a contract to be legally enforceable, there must be consideration from each party.2. it's an exchange of value; you give me value, I give you value; money for money, promise for promise, etc.3. without this it can not be legal binding corporationscan operate as a legally competent party to a contract and take on all the rights, responsibilities, and obligations that a person can.lawful objectivea contract that adheres to state and federal laws considerationsomething of value exchanged by each party to demonstrate agreement to contract terms bindingstuck valuable considerationis a term used to describe consideration that is deemed sufficient or appropriate for that which is offered in exchange.If the consideration given is not comparable in value to that which is being offered, the agreement could be looked at as a gift rather than a valid contract - or, in some instances, as evidence of bad faith in the negotiation.legally competent partiesan attorney in fact representing an incapacitated individual in a contract

exchange of promisesacts as consideration Attorney-in-factthe person receiving the power of attorney; used when contracting with a person of unsound mind.considerationthe $4,000 Joey paid Ben for painting Joey's house