Assignment
The transfer of rights and or obligations in a contract from one party to another.
Consideration
Item of legal value, such as money, referenced in a contract as the motivation for one party to enter in to it. Valid contracts must reference consideration.
Bilateral Contract
A contract in which each party promises the other something in return. Enforceable against both sides. (i.e., "I'll buy if you will sell.")
Contingency
A part of some contracts stating that some event must take place before the agreement is enforceable. (i.e., "The buyer's offer is contingent upon mortgage approval.")
Breach of Contract
Where one or both parties fail to perform some obligation without legal cause. Could be cause for damages.
Earnest Money
Money tendered by the buyer when the offer is accepted to show they are acting in good faith. Common, but not a legal requirement.
Commingling
The combining of earnest or escrow moneys with personal funds. (License Law and business ethics mandate that these funds be kept separate).
Executed Contract
Point when all promises by all parties to a contract have been fulfilled.
Express Contract
Contract where the terms have been put into words, either oral or written.
Option
A unilateral right held by one party to a contract.
Implied Contract
A contract where the parties intent has not been stated in words, only inferred by their actions.
Statute of Frauds
Body of law requiring that some agreements to be put in writing to make them enforceable. (Real estate purchase agreements are subject to this law).
Land Contract
A type of sale where the vendor (seller) finances all or part of the vendee's (buyer) purchase price, and legal title is not conveyed until debt is paid in full. Initially, the vendee only receives possession and equitable title. If the vendee defaults, they could lose all moneys paid to date.
Liquidated Damages
A part of a purchase agreement establishing a pre-determined penalty for breach of contract by either party.
Unenforceable Contract
A contract where one or both parties could not sue to enforce the terms. (i.e. Contracts that are subject to the Statute of Frauds, such as real estate purchase agreements, are legal and valid between the parties, just not enforceable in a court of law if oral).
Unilateral Contract
Contract in which only one party can be forced to perform. (i.e. An option agreement where the seller can be forced to sell but the buyer cannot be forced to buy).
Voidable Contract
A valid contract that can be voided by one or both parties. (i.e. Contracts entered under duress, with fraud or significant misrepresentations may be voided by the harmed party, but are valid until they are voided).
Void
Without legal force. A void contract actually "never was" because it lacked an essential element or was for an illegal purpose.
Equitable Title
The buyer's interest in the property upon delivery and acceptance of the purchase agreement prior to closing. Not legal title, just the right to buy the property under the terms of the agreement.
Novation
Substitution of a new contract replacing the original. One or more of the parties may change, but the intent remains the same.
Rescission
Termination of an agreement, returning both parties to their original positions.
Offer
The presentation of contractual terms, that if accepted, creates a binding agreement.
Acceptance
Complete agreement with all the terms of an offer or counter offer. Must be communicated to the offering party (offeror).