Contract Law & Agreement Drafting Flashcards

When a buyer submits a counteroffer in response to a seller's listed price, the legal effect is:

Answer: The original offer is rejected and replaced by the new terms

A counteroffer legally rejects the original offer and substitutes new terms; the original offeror is under no obligation to accept the counteroffer.

What is 'specific performance' as a legal remedy in contract disputes?

Answer: A court order requiring the breaching party to fulfill the contract terms

Specific performance is an equitable remedy compelling the breaching party to perform their contractual obligations, often sought in real estate transactions because land is considered unique.

The 'statute of frauds' requires that real estate contracts must be:

Answer: In writing and signed by the parties to be charged

The statute of frauds mandates that contracts for the sale of real property must be in writing and signed by the party against whom enforcement is sought to be legally enforceable.

What does 'escrow' refer to in the context of a real estate transaction?

Answer: A neutral third party holding funds and documents until closing conditions are met

Escrow is a legal arrangement in which a neutral third party holds assets—such as earnest money and closing documents—on behalf of the transacting parties until all contract conditions are satisfied.

What distinguishes a 'void' contract from a 'voidable' contract?

Answer: A void contract has no legal effect; a voidable contract is valid until a party elects to rescind it

A void contract is legally without effect from inception (e.g., illegal contracts), while a voidable contract is valid and enforceable unless the aggrieved party—such as a minor—chooses to rescind it.

In contract law, 'novation' occurs when:

Answer: An original party is replaced by a new party, releasing the original party from obligations

Novation substitutes a new party or obligation for an original one, extinguishing the original party's liability and requiring consent from all parties involved.

What is a real estate 'option contract'?

Answer: An agreement giving a buyer the right, but not the obligation, to purchase a property within a specified period

An option contract grants the buyer the exclusive right to purchase property at an agreed price within a set timeframe, but the buyer is not obligated to do so; the seller is bound during the option period.