Chapter 8 Basic Contract Law

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  1. Express Contract
    May be either oral or written, the parties state the terms and show their intentions in words to that effect.
  2. Implied Contract
    The agreement of the parties is demonstrated by their actions or conduct.
  3. Bilateral Contract
    Both parties promise to do or refrain from doing something; one promise is exchanged for another. ("I will do this, and you will do that")
  4. Unilateral Contract
    One party makes a promise to induce a second party to do something.  The second party is not legally obligated to act; however, if the second party does comply, the first party is obligated to keep the promise.  ("I will do this if you do that")
  5. Executed Contract
    All parties have fulfilled their promises and fully performed the contract.
  6. Executory Contract
    Exists when something remains to be done by one or both sides.
  7. Valid Contract
    has all legal elements; is fully enforceable
  8. Void Contract
    Lacks one or all elements; has no legal force or effect
  9. Voidable contract
    has all legal elements; may be rescinded or disaffirmed
  10. Unenforceable Contract
    Has all legal elements; is enforceable only between the parties
  11. 4 elements of a valid contract
    • 1. Legally competent parties
    • 2. Mutual assent or deliberate agreement (Meeting of the minds)
    • 3. Legality of object
    • 4. Consideration
  12. Reality of Consent
    Reached when contracts are signed by a person who is not under duress or undue influence.
  13. Revocation
    An offer may be revoked at any time prior to acceptance if revocation is communicated directly to the offeree by the offeror.  Also revoked if parties notified through their agents.
  14. Counteroffer
    Any attempt by the offeree to change any of the terms proposed by the offeror.
  15. North Carolina Statute of Frauds
    Requires that to be enforceable in a court of law, conveyances of interests in real property must be in writing and signed by the party to be bound or by the party's legally authorized agent.
  16. Parol Evidence Rule
    No oral agreements that contradict the terms of a written contract may be considered in a lawsuit based on the written agreement.
  17. Auction Sales (2 types)
    • With Reserve - Seller can stop auction before final bid is received if it is apparent they will not get as much as they wanted.
    • Without Reserve - Seller agrees to take highest bid no matter what it is.
  18. Time is of the essence
    The contract must be performed within the time limit specified, and any party who has not performed on time is liable for breach of contract.
  19. Assignment
    Substitution of parties; does not terminate the contract or change the terms of the contract.
  20. Novation
    Substitution of contracts; the substitution of a new contract for an existing agreement with the intent of extinguishing the old contract.
  21. Ways to discharge a contract (6 ways)
    • 1. Performance, which completes the contract terms.
    • 2. Partial performance, if agreeable to both parties.
    • 3. Substantial performance
    • 4. Impossibility of performance, required acts cannot be legally accomplished.
    • 5. Assignment
    • 6. Novation
  22. Breach of Contract
    a violation, without legal excuse, of any of the terms or conditions of a contract.
  23. Compensatory Damages
    Money damages awarded to the injured party to compensate him or her for the breach of contract, not to punish the party who breached the contract.
  24. Liquidated Damages
    the amount of money that will compensate the injured party for breach, which the parties agree to at the time they enter into the contract.  In NC, earnest money deposit is considered liquidated damages in the even the buyer breaches the contract.
  25. Consequential Damages
    Obtained if the breach was foreseeable.
  26. Specific performance
    a lawsuit that requires the party to perform contract obligations.
  27. Statute of limitations
    law that allows a specific time limit during which parties to a contract may bring legal suit to enforce their rights.
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Chapter 8 Basic Contract Law
2013-11-07 01:14:42
NC Real Estate Exam

Modern Real Estate Practice in NC 8th Edition
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