Exam (elaborations)
Real Estate Law of Contracts Questions and Answers
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Real Estate Law of Contracts
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Real Estate Law of ContractsWhat is a Contract: - answerA voluntary agreement (promise) between legally
competent parties, Supported by sufficient legal consideration, to do or refrain from
doing some legal act.
A contract must be - answer1. Voluntary 2. An agreement or a promise
3. Made by legally competent parties 4. Supported by legal consideration 5. For a legal
act
Are oral Contracts legal in Texas: - answerOral contracts are enforceable unless
required to be in writing by a law. All real estate contracts must be in writing accept for a
lease agreement one year or less
Elements of a contract - answer1. Agreement reached through offer and acceptance 2.
Legally competent parties 3. Legal consideration
4. Mutual agreement (consent) 5. Lawful objective (Legal purpose) 6. Real estate
contracts must also have an accurate legal description and must be in writing. A notary
acknowledgment is required if the contract needs to be recorded
Distinguish between Unilateral - Bilateral - answerUnilateral: A one-sided agreement. A
promise for an act which becomes a contract when the act is performed (reward offer).
One party makes a promise to entice 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.
Bilateral: A promise for a promise (becomes a contract when the promises are
exchanged). Both parties promise to do something; one promise given in exchange for
another.
Distinguish between Express - Implied - answerExpress - Terms, intent and authority
clearly stated
Implied - from inference based on words or acts of parties (demonstrated by acts and
conduct)
Valid contract - answerAll elements Exist, Fully enforceable
Void contract - answersome basic element is missing, not enforceable, not really a
contract - never became one
Voidable contract - answerA contract which is valid and enforceable unless declared
void (avoided, disaffirmed) by one of the parties (for example contracts with minors, and
, incompetents or there was fraud in inducement). Voidable contract is considered by the
courts to be valid if one of the parties, who has the option to void the contract, does not
do so within a period of time. For example, a contract entered into by a mentally ill
person is usually voidable during the mental illness and for a reasonable period after the
person has recovered.
unenforceable contract - answeris a valid contract but will not be enforced by the courts
because of some legal defense such as statute of limitations (4 years for contracts). It is
a contract that may appear to be valid, however, neither party can sue the other to force
performance.
At what age is a person considered to be legally competent to contract: - answer18 Or
under 18 but married or disabilities removed
Novation - answer- Existing contract is replaced with a new one
- The original parties are no longer liable
- The new agreement may be between the same parties or a new party may be
substituted for either one.
- parties intent must be to discharge the old obligation
Assignment - answer- Transfer of existing contract rights from one party to another.
- Personal obligation may not be transferred without written consent.
- Original Party is still liable unless specifically released.
- most contracts have a clause to either allow or forbid assignment
Comingling - answermixing client's money with yours
Conversion - answerTheft
UETA - answerUniform Electronic Transactions Act
Escrow - answerEscrow agent holds the documents and funds for each party.
Equitable Title - answerIn real estate law, "equitable title" refers to a person's right to
obtain full ownership of a property or property interest. This is often contrasted with or
used in conjunction with the term "legal title." Legal title is the actual ownership of the
land.
Option Contract - answerAn options contract is an agreement between a buyer and
seller that gives the purchaser of the option the right to buy or sell a particular asset at a
later date at an agreed upon price. Options contracts are often used in securities,
commodities, and real estate transactions
What is the parol evidence rule - answerIn general, the parol evidence rule prevents the
introduction of evidence of prior or contemporaneous negotiations and agreements that
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