One that is not recognized legally and has no legal effect.
Some or all of the requirements have not yet been completed.
One in which all requirements of the contract have been fulfilled and the parties have done what they agreed to do in the contract.
Only one party promises to give up something
- a promise is exchanged for some act or performance by the other party.
One in which both parties promise to give up something
- a promise is exchanged for a promise.
One that is capable of being voided by ONE of the parties to the contract.
- it is binding on one party of the contract only.
-it is valid until action is taken by one party to make it void.
Contract for forbearance
contract not to do something
- cannot be enforced in a court of law.
- - an unenforceable contract is valid until challenged in court. example: unwritten contract(parol)
can be enforced in a court of law
legally sufficient and meets all the requirement of the law.
the intent of the party is not stated but is implied
one in which the intent of the parties is stated. (written or oral)
- - expressed vs. implied
- - valid vs. void and voidable
- - bilateral vs. unilateral
- - executed vs. executory
Four Elements that are required for a contract to be valid.
- C = Consideration
- A = Agreement
- L = Legal Objective
- L = Legally competent parties
a promise that someone makes to give up something of value. In a real
estate contract, consideration is not earnest money, it is purchase
something of worth that does not have a monetary value such as love,
affection, or good will. (person gives real property as a gift)
(C) Good Consideration
Anything that has a monetary value such as money, services, merchandise, etc.
mutual agreement or meeting of the minds or offer and acceptance.
(A) 3 general conditions must be met for a mutual agreement (1/3). Offer
- 1. one party(offeror) must have an offer to the other party(offeree).
- 2. The offeree must accept the offer.
- 3. The offeree must communicate the acceptance to the offeror.
- (counteroffer - buyer and seller can be both)
(A) 3 general conditions must be met for a mutual agreement (2/3). None of the following may occur.
1. Fraud = act intended to deceive someone in order to get something of value.
2. Innocent misreoresentation
3. mistake = mutually by both parties, unintentionally, without negligence.
(A) 3 general conditions must be met for a mutual agreement (3/3). Agreement
- Agreement: offer and acceptance must be genuine and freely given.
- - no duress or undue influence used to obtain agreement.
(L) Legal Objective
- - valid contract must have a legal objective
- - cannot call for any actions that violates the law
- - a contract whose objectives is illegal is VOID and cannot be enforced in court.
(L) Legally conpetent
Parties to the contract must be legally competent.
- 3 primary categories of ppl who are not legally competent
- - minors
- - intoxicated persons
- - insane persons
someone who has been granted power of attorney, limited to the specific transaction named in the document.
- Are considered to be artificial persons and may enter into a valid contract.
- - the signing official must have approval of the Board of Directors in the form of a resolution.
- - In GA the corporate seal must be affixed or two officers must sign.
Methods of discharging contracts
- most contracts are discharged by performance of the contract requirements(they are executed)
What are the 3 alternatives to discharging contracts.
- - assignment
- - novation
- - termination
Transfer of one's interest in a contract to another.(executory contract can be assign unless prohibited in the contract)
- - assignor is still ultimately responsible for performance.
What is the difference between assignment and novation.
The withdrawing party's liability with assignment, the assignor is still ultimately liable for performance. With novation, the withdrawing party is released.
Covers cases where real property involved in a sales contract is destroyed
The Uniform Vendor and Purchaser Risk Act
Destruction of property, bankruptcy, or death
Operation of Law
The substitution of a new contract between the two parties which terminates and replaces the old contract or the substitution of new parties for an existing contract.
- - mutual agreement
- - expiration of time
- - recission of a voidable contract
- - operation of law: destruction of property, bankruptcy, death
- - if one of the parties to a contract dies, the contract is terminated only if it requires an act that only the deceased can perform.
- - if either parties becomes bankrupted while the contract is still executory, the contract is terminated.
- - the uniform vendor and purchaser rish act covers cases where real property involved in a sales contact is destroyed.
A state law that states, among other things that some real estate contracts must be in writing to be enforceable.
Statue of Frauds
Only two types of valid real estate contract are enforceable if oral.
- - open listing - listing agreements that allow more than one
- - leases for a period of one year or less
What are 4 valid oral contracts
- 1. open listings
- 2. leases one year or less
- 3. sales contracts
- 4. lease over one year
What two oral contracts are enforceable and which two are not.
- Enforceable: open listing and leases of one year or less
- Unenforceable: sales contract and lease of one year or more
A contract which gives the right to buy a property
What are the three things that must be in an option contract
- 1. gives exclusive right to buy
- 2. must specify a specific ending date
- 2. sales price must also be included
An option must contain all the essential elements of a ___________.
Once the option has been exercised, the buyer has ___________.
An option contract is a ______ contract.
Option differs from right of first refusal (3):
- 1. is a right to have the first opportunity to buy the property
- 2. has no predetermined price
- 3. has no fix time limit to purchase the property