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One that is not recognized legally and has no legal effect.
Void
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Some or all of the requirements have not yet been completed.
Executory
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One in which all requirements of the contract have been fulfilled and the parties have done what they agreed to do in the contract.
Executed
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Only one party promises to give up something
- a promise is exchanged for some act or performance by the other party.
Unilateral
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One in which both parties promise to give up something
- a promise is exchanged for a promise.
Bilateral
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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.
Voidable
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Contract for forbearance
contract not to do something
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Oral Contract
Parol Contract
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unenforceable
- 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
enforceable
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legally sufficient and meets all the requirement of the law.
Valid
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the intent of the party is not stated but is implied
implied
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one in which the intent of the parties is stated. (written or oral)
expressed
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Contract Categories
- - expressed vs. implied
- - valid vs. void and voidable
- - bilateral vs. unilateral
- - executed vs. executory
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Four Elements that are required for a contract to be valid.
- C = Consideration
- A = Agreement
- L = Legal Objective
- L = Legally competent parties
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a promise that someone makes to give up something of value. In a real
estate contract, consideration is not earnest money, it is purchase
price.
Consideration
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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
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Anything that has a monetary value such as money, services, merchandise, etc.
Valuable Consideration
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(A) Agreement
mutual agreement or meeting of the minds or offer and acceptance.
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(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)
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(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.
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(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.
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(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
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someone who has been granted power of attorney, limited to the specific transaction named in the document.
Attorney-in-fact
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Corporations
- 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.
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Methods of discharging contracts
- most contracts are discharged by performance of the contract requirements(they are executed)
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What are the 3 alternatives to discharging contracts.
- - assignment
- - novation
- - termination
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Transfer of one's interest in a contract to another.(executory contract can be assign unless prohibited in the contract)
- Assignment
- - 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.
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Covers cases where real property involved in a sales contract is destroyed
The Uniform Vendor and Purchaser Risk Act
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Destruction of property, bankruptcy, or death
Operation of Law
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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.
Novation
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Termination
- - 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.
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A state law that states, among other things that some real estate contracts must be in writing to be enforceable.
Statue of Frauds
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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
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What are 4 valid oral contracts
- 1. open listings
- 2. leases one year or less
- 3. sales contracts
- 4. lease over one year
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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
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A contract which gives the right to buy a property
Option contract
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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 ___________.
valid contract.
-
Once the option has been exercised, the buyer has ___________.
equitable title.
-
An option contract is a ______ contract.
Unilateral
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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
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