Contracts

Contract

An agreement to do or not to do a particular thing.

Expressed Contract

Agreement in which the parties to the contract declare their intentions- either orally or in writing

Implied Contract

Created by neither words nor writhing but rather by actions of the parties, which indicate that they intend to create a contract.

Bilateral Contract

A promise exchanged for a promise.

"I will do this and you will do that."

Unilateral Contract

One sided contract. A promise exchanges for performance.

"I will do this if you will do that."

Forberance

A promise not to act.

Four essential elements of a contract?

1. Legally Competent Parties.

2. Mutual Agreement

3. Lawful Objective

4. Consideration

Competent Parties

For a contract to be legally enforceable, all parties must be legally competent.

What is the age in Georgia to enter into a legally binding contract?

18

Valid Contract

An agreement that contains all essential elements of a contract.

Void Contract

Contract that is missing an essential element and has no binding effect on the parties.

A contract that never existed?

Void Contract

Voidable Contract

A contract with a defect that can be voided by one of its parties.

Invalid Contract

An agreement that once had validity, but now the validity has ceased.

Enforceable Contract

A contract that a court would allow and uphold.

Unenforceable Contract

A contract that a court would not allow or uphold.

Laches

The loss of a legal right due to failure to assert that right within a reasonable period of time.

Power of Attorney

A document in which one person authorizes another to act on his/her behalf.

Attorney in Fact

Person holding power of attorney.

What is needed to revoke a recorded power of attorney?

Recorded notice of revocation.

Is a corporation considered legally competent?

Yes

Mutual Agreement

Must agree to the provisions of contract. Must be a mutual willingness to enter into contract.

Evidence by the words and acts of the parties indicating that there is a valid offer and an unqualified acceptance.

Mutual Agreement

Offer and Acceptance

Requires that one party (the offeror) make an offer to another party (the offeree)

Offeor is the?

Buyer

Offeree is the?

Saler

Upon receiving the offer, what 3 options do the offeree have?

1. Agree to it.

2. Reject it.

3. Make counteroffer.

Counteroffer

An offer made in response to an offer.

Fraud

Act intended to deceive for the purpose of inducing another to give up something of value.

Innocent Misrepresentation

Party providing the wrong information is not doing so to deceive another for the purpose of reaching an agreement. Ex:Bus stop example

True of False: Ignorance of the law is considered a mistake

False

Duress

The last requirement of mutual agreement. The offer and acceptance must be genuine and freely given.

Lawful Objective

A contract must be for a legal purpose.

Can the courts be called on to enforce a contract by ordering someone to break the law?

No

For an agreement to be enforceable it must be supported by?

Consideration

Consideration

The promise or payment of something good or valuable.

Forbearance qualifies as consideration.

Earnest Money is not Consideration.

The consideration required under general contract law can be?

Valuable or Good

Valuable Consideration

Required for sale contract. Consideration that can be measured in dollars and cents.

True or False: Earnest money, which is common but not legally required, is not consideration required in a sale agreement.

True

Good Consideration

A promise that cannot be measured in terms of money, such as love and affection.

Consideration has 3 meanings in real estate?

1. Standpoint of a legal requirement for valid contract. (Legal consideration or cause)

2. Money

3. Acknowledgment

Statute of Fraud -Purpose

Purpose to prevent fraud by requiring that most contracts for sale of land or an interest in land be in writing and signed to be enforceable in a court of law.

Law in Writing

Statute of Fraud

Written Contracts superseeds?

oral contracts

Typed Print superseeds?

Pre-Printed

Handwritten Superseeds?

Typed Print

Uniform Commercial Code

Requires that the sale of personal property with value in excess of $500 be in writing.

What is the legal purpose of requiring a real estate sales contract be written and signed?

To prevent perjury and fraudulent attempts

True or False: Requirements for a written contract relate only to the enforceability of the contract.

True

Parol Evidence Rule

Permits oral evidence to complete an otherwise incomplete or ambiguous written contract

Executory Contract

A contract that is still in the process of being carried out

Is in the process of being performed.

Executory Contract

Executed Contract

Once completed- performance has taken place.

Execute

Process of completing, performing, or carrying out something.

Novation

The substitution of a new contract between the same or new parties.

If the objective of a contract becomes legally impossible to accomplish, then?

The law will consider the contract discharged.

What happens if there is a valid purchase contract and one party dies?

If a person mortgages property and then dies, the estate must continue the payment or lose the property.

Uniform Vendor and Purchaser Risk Act

States that the seller bears any loss that occurs before the title passes or the buyer takes possession.

Breach of Contract

Failure, without legal excuse, to perform as required by a contract.

What are the 6 alternatives when there's a breach of contract.

1. Accept partial performance.

2. Rescind the contract unilaterally.

3. Sue for money damages.

4. Sue for specific performance.

5. Accept liquidated damages.

6. Mutually rescind the contract.

Partial Performance

An innocent party is willing to settle for partial performance of a contract upon default by the other party.

Ex: repairman

Legal action taken to repeal a contract by one party when the other party has breached a contract.

Ex: Landlord

Unilateral Rescission

Money Damges

If the damages to the innocent party can be reasonably expressed in terms of money, the innocent party may sue.

Specific Performance

An action in court by the innocent party to force the breaching party to carry out the remainder of the contract according to the precise terms, price, and conditions agreed upon.

True or False: If you win your lawsuit, the court will force the seller to deliver title to you as specified in the contract.

True

Liquidated Damages

An amount of money specified in a contract as compensation to be paid if the contract is not satisfactorily completed

Mutual Rescission

Relives the parties to the contract from their obligations to each other.

What is an alternative to mutual rescission?

Novation

Provides a middle ground between suing and rescinding.

Novation

Statute of Limitations

Limits by law the amount of time a wronged party has to seek the aid of a court in obtaining justice.

Georgia has a 6 Year statue on Written Contracts

4 year Statute on Verbal Contracts

2 Year for Personal Injury and Fraud

Caveat Emptor

Let the buyer beware. The buyers have the right to inspect the home before purchasing a home.