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RE Contracts

Real Estate chpt 5 Contracts

QuestionAnswerAdditional
Legal capacity The law makes people responsible for contracts they enter into to be bound by them in their promises Unaccountables: minors and mental incompetents
Agent Person who is authorized by principal to perform acts or sign contracts.
Power of Attorney Written document authorizing another to act as one's agent.
Agent-in-fact An agent appointed by a principal by a written power of attorney.
Meeting of the minds Both parties agree on same promises in a contract is enforceable.
Lawful purpose Contract must be for a lawful purpose to be enforceable.
Statutes of Fraud Requires for certain categories of contracts to be in writing. Categories: 1. payment of debt of another 2. consideration of marriage 3. purchase of land 4. agreements that can't be performed within a yr. 5. contracts involves a promise to act as a guarantor or surety 6. sale of goods over $500.00
Types of Contract Breaches Partial, Material and Total
Partial/immaterial breach a party's failure to fulfill a contract term
Material breach Party fails to fulfill a duty under the contract, which is significant enough to cause the rest of the contract to fail. excuses wrong party from further duty
Total breach Party entirely fails to fulfill entire contract.
Specific Performance Court orders defaulting party to perform promises per contract.
Money Damages Money awarded for a default under a contract amount depends on contract price, which is compared to fair market value.
Rescission Injured party to be as if contract had never occurred. Contract is termed and injured party is reimbursed.
Liquidated Damages Agreed upon sum for damages as the result of default. Within a contract, it's is considered the exclusive remedy.
Injunction Court order prohibiting party from acting
Permanent Injunction Are issued by a court after hearing a matter, and as a part of the judgment order.
Temporary Injunction Court enforced order prohibition party to act for a brief time period. TROs are temporary restraining orders that are a type of temp. injunc.
Preliminary Injunction Enforceable immediately and lasts until court can fully hear a matter and make a permanent decision on matter.
Liquidated Damages Is a clause in the contract advising that any breach in contract is penalized. Both parties agreed to penalty amount in contract draft as reasonable.
Principal Gives legal authority to another to act on his/her behalf in business transactions.
Agency relationship Principal give legal authority to agent to act on principals behalf when dealing with a 3rd party.
Fiduciary Agency relationship based on trust where legal obligations are involved.
Express agreement Written and oral agreement where principal and agent agree to terms of relationship.
Implied agreement Apparent authority for which 3rd party assumes that the principal granted authority to agent.
Obligations Act on bounds of authority that includes, loyalty, performance, notification obedience and accounting.
Marketable Title Title of which purchaser with full knowledge of all facts would accept.
Insurable Title Title that is insurable, considered by title insurance company as being marketable.
Option Is a contract in which owner of real property/optionor agrees w/ optionee to right to buy real property at fixed price & terms agreed on and binds owner of real property to agreement to sell to optionee buyer. Is based on valuable considerations and is irrevocable and must be in writing.
Seller disclosure form A form produced by seller disclosing conditions of real property.
Contract Agreement by two or more persons consisting of a promise/mutual promises that the law will enforce and recognize as a duty of performance. 5 Requirements are: legal capacity mutual agreements considerations lawful purpose written agreement