TPF (Chap. 1: Contract Law Overview) Exam Questions and Answers

TPF (Chap. 1: Contract Law Overview) Exam Questions and Answers Performance - Answer-a contractual agreement or promise to do a particular act Forbearance - Answer-refraining from taking action Incompetent party - Answer-one who does not have the legal capacity to enter into a legally binding contract; a minor, or one who is under the influence of alcohol or other mind altering substances, or one who has been declared mentally incompetent by a court Enforceable Contract aka Binding - Answer-an agreement that meets all of the legal requirements to create a binding contract Minor - Answer-a person who has not reached the age of majority and, therefore, does not have legal capacity to transfer title to real property Attorney-in-fact - Answer-a legally competent and neutral party who is authorized by another to act in that individual's place as a fiduciary Consideration - Answer-something of value given by one party in exchange for something of value from another; money for a promise, money for money, a promise for a promise Earnest Money - Answer-the initial and additional cash deposits tendered by the prospective buyer of real property to show good faith Liquidated damages - Answer-monetary damages to be paid by agreement of the parties in the contract when a default occurs Option - Answer-a contractual right that obligates the seller to sell but gives the buyer the unrestricted right to proceed or terminate within a defined time frame and at an agreed upon price. To be valid in Texas, the buyer must deliver valuable consideration (money) to the seller and time is of the essence Mutual Agreement - Answer-a meeting of the minds between parties to a contract when no fraud, misrepresentation, or undue influence has been present in the negotiations Fraud - Answer-an act of deceit intended to cause someone to part with money or enter into a contract that he or she would not have entered into if the decision had been based on truth and accurate information Lawful Objective - Answer-a lawful purpose Statute of Frauds - Answer-a state law that requires certain documents and agreements be reduced to writing to be enforceable in a court of law