Chapter 9

Front 1

CONTRACT LAW

Back 1

*every contract is implied or expressed, unilateral or bilateral, and executory or executed.

Front 2

IMPLIED AND EXPRESSED CONTRACTS

Back 2

Actions imply agreement. The parties communicate their intentions by acts and conduct.

Words express agreement. The parties communicate their intentions by words, whether spoken or written.

Front 3

UNILATERAL AND BILATERAL CONTRACTS

Back 3

A unilateral contract is a promise for an act, once the act Is performed the promising party must fulfill their promises. Example is a job employment contract, fix my wall then I pay you.

A bilateral contract is a promise for a promise. Both sides consent to each other, so both must fulfill their promises.

*For example, a unilateral contract is enforceable when someone chooses to begin fulfilling the act demanded by the promisor. A bilateral contract is enforceable from the get-go; both parties are bound the promise.

Front 4

EXECUTORY AND EXECUTED CONTRACTS

Back 4

An executory contract exists while one or both parties are satisfying its provisions, performing as promised, meeting their obligations, and still fulfilling the agreement

An executed contract means all terms of contract have been met .

Front 5

REQUIREMENTS FOR A VALID CONTRACT

Back 5

A contract is a voluntary agreement. A valid contract requires mutual assent, legal capacity, legal consideration, legal objective, and satisfies the statute of frauds.

* a contract is valid when it contains all required essentials, it binds the parties and will be enforced by a court.

Front 6

MUTUAL ASSENT

Back 6

An offer is made and accepted.

Front 7

LEGAL CAPACITY

Back 7

*must have sufficient mental competency

*be 18 in Massachusetts

*have legal authority to act

Front 8

LEGAL CONSIDERATION

Back 8

*one parties lawful incentive which explains the other parties motivation for gaining or losing doing or not doing.

Valuable consideration- is anything of monetary value such as money, goods, and services

Good consideration- is the love and affection that has been established between certain people (family discount)

Front 9

LEGAL OBJECTIVE

Back 9

The purpose of the contract must comply with the law or conform to public policy.

Front 10

**STATUTE OF FRAUDS **

Back 10

*certain types of contracts must be written to be enforceable

MEMORANDUM includes:

1names of the parties

2description of the real property

3terms and conditions

4the purchase price

5signature of the parties

(The memorandum can be made up of multiple documents does not need to all be on one single document)

*generally in Mass lease agreements for more than one year must be in writing to be enforceable

*a real estate brokerage contract is not a real estate contract but a kind of employment contract. In Mass, it may be possible to enforce written brokerage contracts.

Front 11

VOIDABLE CONTRACTS

Back 11

A contract is void because one or more essential elements Are missing, it has no legal force, neither party can bind the other, and the agreement can be disregarded.

*a contract is voidable when it does not contain an essential element, yet stands until one side cancels or rejects it.

Front 12

WAYS TO DISCHARGE A CONTRACT

Back 12

1. Full performance- when the parties completely fulfill the terms, execute the agreement.

2. Mutual agreement- is available when it is already allowed in the existing contract or occurs with a separate written agreement.

Assignment- allows one of the parties to withdraw from a contract by transferring rights and duties to a third party.

Novation- goes beyond assignment because either one side is entirely released from contractual responsibilities or the contract is deliberately and completely replaced with a new one.

3. Termination occurs as a result of courts decision to conclude a contract.

Front 13

FORFEITURE

Back 13

When the seller declares the contract forfeited the buyer usually forfeits the deposit, parties usually agree in advance to limit forfeiture to a sum, called liquidated damages, which serves as adequate compensation if one of them defaults. It is rare for a seller to pay liquidated damages usually the buyer recovers the deposit.

Front 14

COMPENSATORY DAMAGES

Back 14

The effort is to put a party in the financial condition expected if the breaching party had fulfilled the terms. A court orders the seller or buyer to pay the other for actual damages. The actual money lost.

Front 15

SPECIFIC PERFORMANCE

Back 15

The defaulting party is compelled to perform under the terms of the contract. A court orders the seller to complete the sale or a buyer to complete the purchase.