PSI EXAM PREP
requires that certain types of contracts, such as for a property ownership transfer, be in
writing to be legally enforceable and to prevent injury from fraudulent conduct. - ANS-
statute of frauds
occurs when the parties enter into an agreement voluntarily with full understanding of
contract terms. - ANS- Offer and acceptance
is something of legal value offered by one party and accepted by another, e.g., the
buyer's promise to pay the full purchase price, and the seller's promise to transfer
marketable title through delivery of a deed. - ANS- Consideration
Legally competent parties - ANS- are those who have the legal and mental capacity to
enter into a contract. Contracts entered into with legally incompetent parties are voidable
at the option of the incompetent party, but may be enforced against the competent party
means that the contract results in a legal outcome. - ANS- Legal purpose
contract means the parties entered into the agreement voluntarily. - ANS- voluntary
Severability - ANS- refers to the concept that if a court deems a term in the contract to be
unenforceable, the remainder of the contract remains enforceable.
voidable contract - ANS- contract is one that appears valid, but one or both parties have
a legal right to disaffirm it.
void contract - ANS- contract isn't a contract at all because it lacks one or more of the
requirements for a valid contract. It has no legal force or effect; it's unenforceable.
executed contract - ANS- is one in which all parties to a contract have met all contract
terms.
executory contract - ANS- until all of the promises in the contract have been completed.
A contract for the sale of real estate is executory until the deed is delivered and
accepted.
notices clause - ANS- describes how contract-related notice may be made and when
notice is considered to have been received.
, breach of contract - ANS- occurs when one party fails to meet contract obligations
unilateral recession - ANS- when a breach occurs, the innocent party may be able to
terminate
Partial Performance - ANS- is when one party meets some, but not all, of the terms of the
contract. The innocent party may agree to accept partial performance, perhaps in return
for some sort of compensation.
specific performance - ANS- suit seeks to force a party to make good on the promises
made in some way.
liquidated damages - ANS- clause that limits buyer damages to a return of the earnest
money if the seller breaches the contract.
Contract discharge (aka performance, execution - ANS- parties have met all contract
items and are discharged from their obilgations
release. - ANS- When one party to a contract agrees in writing that the other party is no
longer held to the provisions of the agreement
rescission (cancellation) - ANS- generally results from an operation of law, such as
breach of contract, destruction of the object of the contract,
Assignment - ANS- means to transfer contractual rights or duties to a new party. Some
contracts have provisions either permitting or prohibiting assignment.
Novation - ANS- occurs when one contract is substituted for another
optionee - ANS- required to pay an option fee to the seller (optionor)
is an addition to an existing document, such as an offer to purchase. It adds terms not
addressed in the main body of the contract form. - ANS- addendum
is a change to an existing contract between parties. It changes one or more of the
original contract terms. - ANS- amendment
Interest pre-payment at closing to temporarily reduce interest rate, usually for a period of
one to three years. - ANS- Buydown:
discount points - ANS- permanently reduce a loan's interest rate.
loan points - ANS- as compensation for processing a new mortgage loan.
requires that certain types of contracts, such as for a property ownership transfer, be in
writing to be legally enforceable and to prevent injury from fraudulent conduct. - ANS-
statute of frauds
occurs when the parties enter into an agreement voluntarily with full understanding of
contract terms. - ANS- Offer and acceptance
is something of legal value offered by one party and accepted by another, e.g., the
buyer's promise to pay the full purchase price, and the seller's promise to transfer
marketable title through delivery of a deed. - ANS- Consideration
Legally competent parties - ANS- are those who have the legal and mental capacity to
enter into a contract. Contracts entered into with legally incompetent parties are voidable
at the option of the incompetent party, but may be enforced against the competent party
means that the contract results in a legal outcome. - ANS- Legal purpose
contract means the parties entered into the agreement voluntarily. - ANS- voluntary
Severability - ANS- refers to the concept that if a court deems a term in the contract to be
unenforceable, the remainder of the contract remains enforceable.
voidable contract - ANS- contract is one that appears valid, but one or both parties have
a legal right to disaffirm it.
void contract - ANS- contract isn't a contract at all because it lacks one or more of the
requirements for a valid contract. It has no legal force or effect; it's unenforceable.
executed contract - ANS- is one in which all parties to a contract have met all contract
terms.
executory contract - ANS- until all of the promises in the contract have been completed.
A contract for the sale of real estate is executory until the deed is delivered and
accepted.
notices clause - ANS- describes how contract-related notice may be made and when
notice is considered to have been received.
, breach of contract - ANS- occurs when one party fails to meet contract obligations
unilateral recession - ANS- when a breach occurs, the innocent party may be able to
terminate
Partial Performance - ANS- is when one party meets some, but not all, of the terms of the
contract. The innocent party may agree to accept partial performance, perhaps in return
for some sort of compensation.
specific performance - ANS- suit seeks to force a party to make good on the promises
made in some way.
liquidated damages - ANS- clause that limits buyer damages to a return of the earnest
money if the seller breaches the contract.
Contract discharge (aka performance, execution - ANS- parties have met all contract
items and are discharged from their obilgations
release. - ANS- When one party to a contract agrees in writing that the other party is no
longer held to the provisions of the agreement
rescission (cancellation) - ANS- generally results from an operation of law, such as
breach of contract, destruction of the object of the contract,
Assignment - ANS- means to transfer contractual rights or duties to a new party. Some
contracts have provisions either permitting or prohibiting assignment.
Novation - ANS- occurs when one contract is substituted for another
optionee - ANS- required to pay an option fee to the seller (optionor)
is an addition to an existing document, such as an offer to purchase. It adds terms not
addressed in the main body of the contract form. - ANS- addendum
is a change to an existing contract between parties. It changes one or more of the
original contract terms. - ANS- amendment
Interest pre-payment at closing to temporarily reduce interest rate, usually for a period of
one to three years. - ANS- Buydown:
discount points - ANS- permanently reduce a loan's interest rate.
loan points - ANS- as compensation for processing a new mortgage loan.
