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Real Estate Legal Aspects CH 6 - Law of contracts Questions with Correct Answers
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Real Estate Legal Aspects CH 6 - Law of contracts Questions with Correct Answers
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Real Estate Legal Aspects CH 6 - Law of contractsQuestions with Correct Answers
Contract law consists of Correct Answer-both common law and statutory
rules that govern the creation, interpretation, and enforcement of
contracts.
The Six Elements Required of a Valid Contract: Correct Answer-
Competent parties
Consideration
Mutual Agreement
Lawful Objective
In Writing and Signed by the Parties
Contain a Legal Description
A competent party Correct Answer-has the legal capacity to enter into a
contract and may be held to the promises made in the agreement. An
incompetent party may not be held to the terms of the contract.
The legal definition of competent party in California addresses age,
literacy, mental capacity, existence, and legal authority.
The party must have reached the age of majority. Correct Answer-In
California, the majority age is 18 years OR any married person even if
under the age of 18. A person 16 or 17 years old may be emancipated
and declared an adult with contractual capacity. If the person is
pregnant, the emancipation age can be even younger. Persons under 18
,are minors and a contract signed by a minor is voidable unless it is
entered into for necessity.
Consideration Correct Answer-the exchange of promises offered by one
party to another to do or not do something. Consideration separates
contractual obligations from a gift. It is usually something of value being
exchanged by one party to receive something of value from the other
party. Consideration can be the exchange of money, services, personal
property, rights, or the requirement to refrain from doing something.
Consideration does not always have to be something tangible.
legal benefit Correct Answer-provides something to a party that he or
she was not previously entitled t
legal detriment Correct Answer-is something a party will do that he or
she was not previously obligated to
Liquidated damages Correct Answer-funds paid by the defaulting party
to the non-defaulting party according to the terms of the contract.
mutual agreement. Correct Answer-The full consent of all parties to a
contract
It is a meeting of the minds and is also referred to as mutual assent.
the parties have entered into contract with full and truthful information
and have done so voluntarily. This decision must be based on accurate
information.
, mutual rescission Correct Answer-When the parties mutually agree to
voluntarily cancel a contract
There are a variety of issues to consider regarding offers and mutual
agreement: Correct Answer--The person making the offer is called the
offeror and the person with the ability to accept or reject the offer is
called the offeree.
-An offer must be definite, certain, and clearly understandable.
-Prior to an offer being accepted by the offeree, the offeror can revoke
the contract.
-An offer is terminated if the offeree rejects the offer or makes a
counteroffer.
-An offer is accepted when the offeree accepts the offer exactly as the
offer is conveyed; no terms or conditions can be changed. In a real estate
transaction, the parties all provide their signatures as agreement to the
written terms of the contract.
Lawful Objective Correct Answer-Contracts are not valid that require
performance that is unlawful (illegal).
A contract with some legal parts and some illegal parts is usually still
valid, however, only the legal parts are valid and the illegal parts are
void.
Further, if a contract is for legal purposes at the time it was executed, but
becomes illegal prior to the performance of the contract, the contract
becomes void.
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