FIL 260 Exam 2 Questions With Correct
Answers A+
Contracts: Offer and Acceptance - AnswerOffer: a promise to act in specified way if the other
party will act in some other specified way
Acceptance: offeree agrees to abide by terms of contract, as stated in the offer
***Important in real estate...
Contracts: Offer and Acceptance - Answer✔Offer: a promise to act in specified way if the other
party will act in some other specified way
Acceptance: offeree agrees to abide by terms of contract, as stated in the offer
***Important in real estate because:
· Listing property for sale is not offer to sell, it is an invitation for buyers to make an offer
· Offer to buy may have conditions (inspection, financing) called contingencies
Offer must (3 things): - Answer✔1 - Not be a joke
2 - Be communicated by Offeror (person offering XYZ) to the Offeree (person considering the
offer). Both parties must know the offer exists (You can't tell Grant you are buying something
that Zach is selling and Zach doesn't know)
Offer can be made by a buyer (offer to buy something) or a seller (offer to sell something)
3 - Have definite terms - you must know who the seller is, who the buyer is, the price, the
property to be bought/sold, etc.
4 ways to terminate an offer - Answer✔1 - Lapse -- offeror states when offer terminates and if
there is no stated period than offer is good for a "reasonable" amount of time
2- Revoked --- offer is withdrawn prior to acceptance
3 - Rejection by offerree -- offerree doesn't accept offer
or they may counteroffer (make a new offer Ex. House is being sold for $300k, buyer offers
$280k, seller counteroffers at $290k)
4- Operation of law -- death, incapacitated, house to be sold caught on fire.
Incomplete acceptance - Answer✔Offer hasn't been accepted/rejected yet.
Contracts: Specific Performance
*If a seller breaches, the buyer may seek relief through Specific Performance - Answer✔The
performance of a contractual duty, as ordered in cases where damages would not be adequate
remedy.
- the seller is ordered by the court to deliver a deed to the specified real estate, on the grounds
that the buyer may need that unique property. (Courts will order specific performance against a
defaulting seller far more often than against a defaulting buyer.
Specific Performance Example: Perfect vs. McAndrew (2003) Indiana
Case in favor of buyer (buyer wins --- seller had to sell property as they originally agreed to) -
Answer✔Perfect (seller) tried to rescind (back out of the sale) the sale of his property because he
found out that his property was 96 acres rather than the 81 acres he thought it was. He wanted to
cancel the sale and raise the price. Court ordered specific performance (seller had to go through
with the original sale of the land) because the sale just listed the property he was selling and
didn't specifically state the number of acres he was selling.
Specific Performance Example: Arizona case
Case in favor of seller (seller wins - seller didn't have to sell their property) - Answer✔Seller
agreed to finance (take payments from the buyer) the buyer's purchase, but found out the buyer
received their down payment fraudulently. Court ordered seller didn't have to sell - judge did not
want to force the seller into a continuing relationship with an untrustworthy party.
Statute of Frauds - Answer✔To reduce the chance of fraud, contracts should be in writing and
signed by all parties to be enforceable in a court.
All real estate contracts come under statute of frauds provisions, though a verbal contract may
become enforceable after one or both parties have substantially performed as agreed, such that
the intentions of the parties could be inferred clearly - like if a buyer "partially performed" by
paying for land, taking possession, and starting to build improvements
Contract for sale of real estate can be: - Answer✔A contract for the sale of real estate may be an
expressed agreement, or may be implied (deemed by the court to exist) through a series of other
documents (signed letters, canceled checks that relate to the same transaction). Parties, property,
and price should be clearly identified so a court can conclude that there was a genuine intent by
both parties to transact.
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