Contract Law & Agreement Drafting Flashcards

An 'addendum' to a real estate contract is best described as:

Answer: A supplemental document that adds or modifies terms of the existing contract

An addendum is a document attached to and made part of the original contract that adds, changes, or clarifies specific terms without replacing the entire agreement.

Which doctrine allows a court to refuse enforcement of a contract clause found to be grossly unfair or oppressive?

Answer: Unconscionability

The unconscionability doctrine empowers courts to void or modify contract terms that are so one-sided or oppressive—particularly when one party had no meaningful choice—that enforcement would be unjust.

What is 'due diligence' in the context of a negotiated real estate agreement?

Answer: The buyer's investigation period to inspect, research, and verify facts about the property

Due diligence refers to the buyer's systematic investigation of the property—including inspections, title review, and zoning checks—typically allowed within a contractually specified period before becoming fully committed.

When a party fails to fulfill a material obligation under a contract, this is known as:

Answer: Breach of contract

A breach of contract occurs when a party fails without legal excuse to perform a duty required by the contract, entitling the non-breaching party to seek remedies such as damages or specific performance.

An 'indemnification clause' in a contract is designed to:

Answer: Require one party to compensate the other for specified losses, damages, or liabilities

An indemnification clause obligates one party to hold the other harmless and cover costs arising from specified events, risks, or third-party claims, thereby allocating financial risk between the parties.

The 'parol evidence rule' in contract law generally provides that:

Answer: Prior oral or written negotiations cannot be used to contradict or modify the terms of a final written contract

The parol evidence rule prevents parties from introducing prior or contemporaneous oral agreements to contradict the terms of a fully integrated written contract, promoting certainty and reliance on written documents.

In negotiating real estate contracts, a 'merger clause' (also called an integration clause) serves to:

Answer: Confirm that the written contract represents the entire agreement, superseding all prior negotiations

A merger clause declares that the written contract is the complete and final agreement between the parties, ensuring that prior verbal negotiations, promises, or representations are not later claimed as additional terms.