S1 C10: Unit 1: Contract Types and Their Legal Effects Flashcards

S1 C10: Unit 1: Contract Types and Their Legal Effects Flashcards Two intoxicated co-workers sign a contract in which they agree to marry each other if they're both still single when they reach age 40. Which of the following is true about this contract?A. This is an enforceable contract because it has a time period in which it must be completed.B. This is a valid contract because the parties are adults and the consideration (marriage) is legal.C. This is a voidable contract because the parties were intoxicated at the time they signed it.D. This is a void contract because it is illegal for co-workers to enter into a relationship-related agreement.

• This is a voidable contract because the parties were

intoxicated at the time they signed it.Purpose of the statute of fraudsTo prevent fraudulent "proof" of an oral contract. Oral testimony is not considered sufficient for creating a contract to transfer the title to real property.Which of the following is true about the statute of frauds?A.All types of written contracts, with the exception of email or other online communication, may be considered "in writing" and binding.B. Any form of written contract, including email communication, may be considered "in writing" and binding.C. Only contracts that are handwritten are considered to be "in writing" and binding.D. Only pre-printed contracts, the blanks of which have been filled in in ink, are considered to be "in writing" and binding.

• Any form of written contract, including email

communication, may be considered "in writing" and binding Real Estate Purchase Agreement: Executory or ExecutedA real estate purchase agreement will be either executory or executed, depending on what stage of the process the transaction is in. When all terms of the contract have been met, the contract is executed. If any terms remain, the contract is executory. Keep in mind that an "executed" contract is also the term you'll hear once the parties have agreed to all terms in writing.Explain implied contractOne in which the agreement is assumed based on circumstances. When a company is hired to perform services, the assumption that the services will be provided and the consumer will pay for the services rendered. A home inspector or cleaning company could fall in this category.Real Estate Purchase Agreement: ExpressTo be enforceable, a real estate purchase agreement must be expressed in writing and signed by the transaction parties Voidable contractA contract that may be cancelled by one or more parties for one of several reasons. It may be missing an essential

element and thus invalid; it may contain a mistake or a misrepresentation, or it may have been created or executed by a party under duress.

You own an "option to buy" on a property that says if you want to buy the place in two years for $20,000, you may.Bilateral vs. Unilateral Unilateral agreementOnly one person has an obligation

here: the seller. You're not obligated to buy. You just have

the option to do so.You're talking to a co-worker at lunch and she mentions she has a box of baby clothes her kids have outgrown that she needs to get rid of. You have a baby on the way, so you offer to pay her $25, and she agrees to bring the box to work the next day and give it to you. Which of the following is true in this situation?A. This is an express contract because you defined in words the specific terms of the agreement and consideration to be exchanged.B. This is an implied contract because it is not written down and nobody signed anything.C. This is an invalid contract because it is not written down and nobody signed anything.D. This is a unilateral contract because only one party is providing anything of value.

• This is an express contract because you defined in

words the specific terms of the agreement and consideration to be exchanged.An express contract is one in which the terms of the agreement and consideration to be exchanged are defined in words, whether orally or in writing.Examples of bilateral real estate contracts: 1. Listing agreement (exclusive right to sell and exclusive

agency): The seller client agrees to pay the agent a

commission in return for listing the property.2. Buyer

representation agreement: The buyer client agrees to pay

the agent a commission in return for helping the client find

and buy a property.3. Purchase agreement: The seller

promises to convey the property to the buyer in return for payment. Both parties promise to adhere to the terms specified in the contract and perform certain actions.4.

Lease agreement: In exchange for the promise of monthly

payments, the landlord promises the use of the premises to the tenant for the term of the lease.What is a unilateral contract?A contract in which consideration (such as a promise) is only given by one party to the other Enforceable or Unenforceable ContractAn oral agreement to purchase a property Unenforceable contractTransfers of interest in real property must be in writing, per the statute of frauds.Enforceable or Unenforceable ContractA written purchase agreement to buy a property, accepted in writing by the seller Enforceable contractWritten, signed agreements are enforceable.Enforceable or Unenforceable ContractChet offers to buy Tina's property for $500,000. His offer includes no earnest money. Tina accepts his offer.EnforceableEarnest money isn't required to have a binding contract. Chet's promise to pay the purchase price is the consideration.Real Estate Purchase Agreement: ValidA properly prepared real estate purchase agreement is valid assuming that it contains all essential elements.Ken signed a contract to purchase Debra's condo. Ken signed the contract two weeks prior to turning 18, which is the age of majority in his state. Debra found out about his age prior to the closing but honored the contract, and they closed on the condo a month after Ken's birthday. What

was the status of the contract when Ken and Debra entered into it?A. ExecutedB. IllegalC. VoidD. Voidable

• Voidable

What's the Statute of Frauds?This law states that contracts involving the creation of an interest in real property or the conveyance of an interest in real property must be written and signed by both parties to be enforceable.