Real Estate Principles
UNL Finance 382
Chapter 7
Contract Law

Real Estate Principles, 11th Ed., Charles J. Jacobus
	© 2010 by Cengage Learning

Contract: Legally enforceable agreement
Expressed:  Parties declare I                                  
Implied: Created by A                               of parties
B                                    :  Promise exchanged for a promise
Unilateral: Promise exchanged for P                                  

Legal Effect of Contracts

Valid: Meets all R                            of law.
Void: No legal effect & not a contract.
Voidable:	
Enenforceable: May have been valid at an earlier time but now E                               is barred

Essentials of Valid Contracts

*Essential elements must exist or the contract is voidable by the innocent or injured party.
CLOaC
	C                          Parties:	
	L                           Objective:	
	Mutual Agreement (O                 and   A                     ) 
		(See below Meeting of Minds)
		Parties:
			Offeror:	
			Offeree:		
	Consideration:	

Signed by party to be C                                

Meeting of the Minds

Offer and Acceptance: Mutual Agreement, Mutual Consent, Meeting of the minds, the parties must have C                                    intent:
One party makes an offer, the other party	

If Offeree wants to change a term, price or other provision, the Offeree may make a C                                    .  The original offer is now void, and the Offeror is now the Counterofferee.

Fraud, Mistake and Duress

Fraud and Intentional Misrepresentation
	Act intentionally to D                             
	Other party was deceived and was D                               
	Other party may rescind because M                        A                         lacking
Mistake and Innocent Misrepresentation
	Mistake of a M                             fact and vague negotiation
I                              misrepresentation no intent to deceive but innocent party may still disaffirm 
Duress, menace and undue influence all cause to R                          contract

Consideration

A contract cannot be enforced if there is no consideration
Consideration may be in the form of:
	Promises:	
	Monetary:
		Actual	
		Nominal	
	Good and valuable: includes “L            and A                  ” 	

Statute of Frauds

In each state there is a law that is commonly known as a statute of frauds. 
Requires that all contracts for the sale of land, be in W                               and S                     to be enforceable in a court of law.
Its purpose is to prevent frauds
Parole Evidence Rule:  Rule of E                                       permitting oral “explanation” of                               

Esign

Authorizes electronic agreements
Allows for electronic signatures

State may supersede this legislation 

Performance

Execute: May refer to S                or P                                        
	Executory in the P                             of being carried out
	Executed F                          performed or S                        
Performance:
	Discharge: What happens to the contract after it is fully performed
	Assignment: New S                           to contract
	Novation: S                             new contract
Death of party: (Depends)		
Destruction of property: (Depends)	

Breach of Contract

Partial performance: performing party has defaulted part way through contract and innocent party may	
Unilateral Rescission Available to injured parties in some circumstances
Money damages: If innocent party can identify a specific amount of damages to the injury may S                               for the money lost.
Specific performance: The innocent party may sue the breaching party to P                  the agreement.
Liquidated damages: An amount agreed upon that the innocent party may accept if the other fails to perform.
Mutual Rescission: Parties may agree to rescind the agreement.

Statute of limitations: The law may specify the amount of time within which a lawsuit may be brought for breach of the agreement.

Key Terms

Breach of contract
Competent party
Consideration
Contract
Counteroffer
Duress
Fraud
Liquidated damages
Power of attorney
Specific performance
Void contract
Voidable contract