Section 10: Unit 2 Essential Elements of a Valid Contract Flashcards

Section 10: Unit 2 Essential Elements of a Valid Contract Flashcards

What's consideration with regard to a contract?- The parties receive a copy of the contract for their records.- The parties carefully consider if they will accept the other party's offer.- A buyer decides to rescind an offer.- Something of value is given in exchange for something of value.Something of value is given in exchange for something of value.Read through these situations and decide whether they invalidate consent.The information in the contract lists that the property for sale is 5200 sq. ft. when actually, it's 2500 sq. ft.- Invalidates consent- Consent still exists Invalidates consent

True or false regarding consent:Contracts are valid as long

as at least one party has agreed to it voluntarily.False Legally competent partiesAge of majority and mental soundness ConsiderationSomething of value, even a promise to do or not to do something Legal purposeMust be for a lawful reason

True or false regarding consent:If your client signs a

contract while under duress, that contract is not valid.True What is a legally competent party?- A party at which there are no illegal substances- A party who knows how the legal system works- A party who has a lot of experience in drawing up contracts- A party who has the legal and mental capacity to enter into a contract A party who has the legal and mental capacity to enter into a contract

True or false regarding consent:"Voluntary Agreement"

means the same thing as "under duress." False Read through these situations and decide whether they invalidate consent.Bryce wants to make an offer on a house, but his financial institution won't give him the interest rate he wants.- Invalidates consent- Consent still exists Consent still exists

True or false regarding legally competent parties:If a party

doesn't have legal capacity and enters into a contract anyway, the contract is voidable by the party lacking the capacity.True What are the five essential elements of a valid real estate contract?- Notarized- Offer and acceptance- Consideration- Legally competent parties- Legal purpose- Consent

• Offer and acceptance- Consideration- Legally competent

parties- Legal purpose- Consent What does legal purpose mean?- To be legal, contracts must involve a lawyer.- Only contracts that state a purpose are legal.- Contracts must be written for a lawful objective.- As long as a contract has a purpose section and that purpose has been completed, the contract is legal.Contracts must be written for a lawful objective.

True or false regarding consent:One form of duress is a

threat of significant economic harm.True It must be in writingRequired for contract validity only when the nature of the contract is real property Offer and AcceptanceRequires metal agreement of terms

True or false regarding legally competent parties:A minor

who enters into a contract with an adult to purchase real estate may hold the adult to the contract, but the adult can't legally hold the minor to the contract.True Read through these situations and decide whether they invalidate consent.Jill can't quite afford the down payment on the house she wants, so her aunt loans her $10,000. Jill makes a written offer on the house.- Invalidates consent- Consent still exists Consent still exists Read through these situations and decide whether they invalidate consent.Shelly's uncle, who manages a condominium complex where Shelly owns a condo, tells Shelly that if she doesn't sell her house to his friend, something may happen to her condo.- Invalidates consent- Consent still exists Invalidates consent

True or false regarding legally competent parties:A minor

who enters into a contract to purchase real estate has contractual ability.False In a real estate transaction, which three of the following are examples of consideration?- The seller's promise to sell the property to the buyer- The seller's commitment to transfer the property to the new owner- The buyer's decision to take out a loan- The property itself

• The seller's promise to sell the property to the buyer- The

seller's commitment to transfer the property to the new owner- The property itself Rhoda has power of attorney for her father, Winston, who is 85 and has a heart condition. Over the years, she's made recommendations to him about which properties he should buy and sell. She asks her father to please invest in her new restaurant, but Winston declines. He thinks it's too risky. Rhoda is furious and tells him that she will no longer take care of his financial matters. So Winston, with nowhere else to turn, gives her $20,000 as a loan, and he signs a contract under those terms.Later, Rhoda's restaurant fails. Winston goes to court to get his money back, but Rhoda produces a contract that says that the money was an investment, not a loan. Winston said that he thought he signed a contract that made the money a loan.Which of the following statements about this situation are true? Select all that apply.- Winston signed the contract of his own free will, so his consent was not invalidated.- Rhoda had undue influence over her father, so Winston's

consent was invalidated.- Rhoda's power of attorney has no bearing on the financial dispute over her restaurant.- Rhoda is innocent, and Winston should have read the contract more carefully.- Rhoda's actions have given Winston the power to void the contract.

• Rhoda had undue influence over her father, so Winston's

consent was invalidated.- Rhoda's actions have given Winston the power to void the contract.A contract for an illegal purpose is ______.- Void- Negotiable- Executed- Executory Void