You can expect to see twelve questions on the end-of-course exam and twelve questions on the state exam from this unit. This material is some of the most heavily weighted on the exam.

Learning Objectives

After successfully completing this unit, you will be able to
• list and describe the essentials of a contract,
• distinguish among formal, parol, bilateral, unilateral, implied, expressed, executory and executed contracts,
• describe the various ways in which an offer is terminated,
• describe the various methods of terminating a contract,
• explain the remedies for breach of a contract,
• describe the effect of the Statute of Frauds and the Statute of Limitations,
• describe the elements of an option,
• differentiate among the various types of listings,
• explain and describe the various disclosures required in a real estate contract,
• recognize what constitutes fraud, and
• recognize what constitutes culpable negligence.

Key Terms

assignment	net listing
attorney-in-fact	novation
bilateral contract	open listing
competent	option contract
contract	Statute of Frauds
exclusive-agency listing	Statute of Limitations
exclusive-right-of sale listing	unenforceable
fraud	unilateral contract
liquidated damages	valid contract
meeting of the minds	void contract
	voidable contract

Overview

Of all the documents that a real estate licensee prepares, none have greater importance than real estate contracts. A contract sets forth the complete agreement of the buyer and the seller. If the contract is improperly prepared, it can cause significant losses to all the parties, including the licensee.

This unit describes the various types of contracts. You’ll learn about how offers and contracts are terminated. You’ll learn why real estate contracts must be written and the period that they can be legally enforced. You’ll also learn about listing contracts and option contracts.