Chapter 11: Principles of Real Estate Contracts

Types of Contracts

*   Valid: binding on all parties

*   Voidable: dis-affirmable by one party

*   Void: not binding on any party

*   Expressed: clearly delineated

*   Implied

Other Types of Contracts

*   Unilateral: promise for an act: no requirements on one party until performance

*   Listing

*   Option

*   Bilateral (Sales, Mortgage, Lease) (promise for a promise)

*   Executory

*   Executed

Contracts for Sale

*   Role of contracts

*   Specify duties, rights, obligations of parties

*   Provide remedies in case of default

*   Specify timing of events

*   Statute of frauds

Elements of Valid Contract Offer and Acceptance

*   Termination of offer

*   Accept

*   Rejection

*   Lapse of time

*   Counter offer

*   Mail

Reality of Consent (Mutual Assent): Meeting of the Minds

*   Undue influence

*   Mistake

*   Misrepresentation, puffing

*   Fraud

Elements of Valid Contract Competent Parties

*   Infants

*   Voidable upon majority

*   May contract for necessities but need only pay for "fair market value"

*   Diminished mental capacity

*   Insane: voidable if not adjudicating or if no undue harm; voidable if notice through actions

*   Drunkards

*   Duress, undue influence

Other Elements of a Valid Contract

*   Legal object

*   Consideration

*   Good and valuable

*   Unconscionable

*   Love and affection

*   Executed

*   Executory

*   Written and signed

*   Adequate legal description

Special Clauses in Contracts

*   Time is of the essence

*   Assignment

*   Novation

Remedies for Breach of Contract

*   Ignore the breach

*   Specific performance

*   Damages

Preliminary Contracts

*   Binder - obligates both parties to complete negotiation of a contract

*   Letter of intent - Obligates parties to serious negotiation

*   Options

*   Right of first refusal