Contracts 1
Classifying Contracts Contracts can be created orally. 2
Classifying Contracts Contracts can be created in writing. 3
Classifying Contracts The Statute of Frauds states that most real estate contracts must be in writing to be enforceable. 4
Express Contracts are clearly communicated. Classifying Contracts Implied Contracts are created by your actions. 5
Classifying Contracts Valid Contract Contains all the essential legal elements. 6
Essential Elements of a Contract Classifying Contracts A contract cannot live without: Consideration Assent (Mutual & Genuine) Legal Capacity Legal Purpose 7
Classifying Contracts Void Contract At least one of the essential elements is missing. 8
Classifying Contracts Void Contract Is NOT a contract. 9
Classifying Contracts Voidable Contract All essential elements are present BUT one or more may be removed. 10
Classifying Contracts Voidable Contract Only the person acting under the disability may choose to rescind. 11
Classifying Contracts Voidable Contract Unless it is rescinded it is a valid contract. 12
Enforceable Contract Classifying Contracts Parties may be forced to perform according to contract terms. 13
Classifying Contracts Unenforceable Contract A contract of this type is one that cannot be enforced by either party in a court of law. 14
Unenforceable Contract Classifying Contracts The time for filing has passed according to the Statute of Limitations. 15
Classifying Contracts Unenforceable Contract Certain verbal contracts are unenforceable under the Statute of Frauds. 16
Executory Contract Is one in which one or both parties have not yet performed. Classifying Contracts 17
Classifying Contracts Executed Contract Is one in which all parties have performed all the provisions of the contract. 18
Classifying Contracts Bilateral Contract Is one in which both parties make promises and therefore incur obligations. 19
Classifying Contracts Unilateral Contract Is one in which only one party is making a promise for the action of another. 20
Essential Elements of a Contract Competent Parties Minors - A contract signed by a minor is voidable at the minor s option. 21
Essential Elements of a Contract Competent Parties Minors - The contract can be voided any time up to the age of majority, and a reasonable length of time thereafter. 22
Essential Elements of a Contract Competent Parties A contract signed by a party who has been declared legally incompetent is void. 23
Essential Elements of a Contract Competent Parties A contract signed by a party who was under the influence of alcohol or drugs is voidable. 24
Essential Elements of a Contract Competent Parties The person who authorizes another person to act on their behalf is the principal. 25
Essential Elements of a Contract Competent Parties The person who acts on behalf of another person is an attorney-in-fact. 26
Essential Elements of a Contract Competent Parties The authorization is called a power of attorney. 27
Essential Elements of a Contract Competent Parties Corporation - A legal entity which can enter into a contract. 28
Essential Elements of a Contract Competent Parties Corporation - A corporate resolution signed by the board of directors authorizes certain officers to sign and bind the corporation. 29
Essential Elements of a Contract Court Appointees Administrators, trustees or guardians receive the authority to sign contracts from the court. 30
Mutual Ascent Essential Elements of a Contract There must be a meeting of the minds on every detail of the contract. 31
Meeting of the Minds 32
Meeting of the Minds Offer Buyer Offeror Seller Offeree Acceptance 33
Meeting of the Minds $190,000 Buyer Offeror Seller Offeree NO! 34
Meeting of the Minds Buyer Offeror Seller Offeree $200,000 35
Meeting of the Minds $195,000 Buyer Offeror NO! Seller Offeree 36
Meeting of the Minds $195,000 Buyer Offeror Seller Offeree YES! Acceptance 37
Essential Elements of a Contract Mutual Assent A person making an offer may withdraw the offer at any time prior to being notified that their offer has been accepted. 38
Mutual Assent Essential Elements of a Contract There is no contract if the time limit for acceptance of the offer has expired. 39
Essential Elements of a Contract Mutual Assent There is no contract if either party dies before a final agreement can be reached. 40
Mutual Assent Essential Elements of a Contract There is no contract if the house burns down before a final agreement is reached. 41
Essential Elements of a Contract Mutual Assent Contract is created only when notice is actually received by the offeror or their agent. 42
Mutual Assent Essential Elements of a Contract Constructive Communication - The contract is created when the message is sent, not when it is received. 43
Essential Elements of a Contract Mutual Assent If the contract does not detail the means of acceptable notice, respond with the same method of communication as the offer. 44
Genuine Assent Essential Elements of a Contract The parties to the agreement have acted of their own free will. 45
Essential Elements of a Contract Innocent Misrepresentation Misstatements of fact made without any intention to deceive another person. 46
Essential Elements of a Contract Innocent Misrepresentation If the matter is of material value, and the other party relied on it, the contract is voidable. 47
Actual Fraud Essential Elements of a Contract A deliberate and malicious misrepresentation of a material fact. 48
Essential Elements of a Contract Actual Fraud The contract is voidable by the injured party. 49
Negative Fraud Essential Elements of a Contract Is concealment of important information. 50
Essential Elements of a Contract Negative Fraud The contract is voidable by the injured party. 51
Constructive Fraud Essential Elements of a Contract Occurs when material facts are misrepresented with no intent to deceive or mislead the other party. 52
Essential Elements of a Contract Constructive Fraud The act is also called negligent misrepresentation. 53
Constructive Fraud Essential Elements of a Contract The contract is voidable by the injured party. 54
Essential Elements of a Contract Mutual Mistake Occurs if both parties to a contract are mistaken about certain facts vital to a contract. 55
Mutual Mistake Essential Elements of a Contract There is no mutual assent, and the contract is void. 56
Essential Elements of a Contract Menace Occurs when someone has been coerced into signing by a threat of force. 57
Essential Elements of a Contract Duress Occurs when someone has been forced to sign a contract. 58
Essential Elements of a Contract Menace or Duress A contract signed under menace or duress is voidable by the injured party. 59
Undue Influence Essential Elements of a Contract When someone is influenced to sign a contract by another due to a relationship of trust and confidence. 60
Essential Elements of a Contract Undue Influence The contract is voidable by the injured party. 61
Essential Elements of a Contract Valuable Consideration Is money or its equivalent. 62
Essential Elements of a Contract Good Consideration Is for love and affection. 63
Legal Purpose Essential Elements of a Contract If the purpose of the contract is illegal, in whole or in part, the contract is void. 64
Essential Elements of a Contract Statute of Frauds Requires certain contracts to be in writing and signed in order to be enforceable. 65
Statute of Frauds Essential Elements of a Contract It Includes all contracts for the sale of an interest in real property. 66
Essential Elements of a Contract Statute of Frauds It Includes all contracts that cannot be performed in one year and for personal property valued over $500. 67
Essential Elements of a Contract Parole Evidence Rule Relates to the fact that written agreements always take precedence over oral agreements. 68
Discharge of Contractual Obligations Performance Executory Contract A contract in which all of the terms have not yet been performed. 69
Discharge of Contractual Obligations Performance Executed Contract Is a contract in which all of the terms have been performed. 70
Discharge of Contractual Obligations Performance - Time is of the Essence Means that all time limits in the contract must be strictly observed. 71
Discharge of Contractual Obligations Supervening Illegality When a change in the law makes the obligations under the contract legally impossible to perform. 72
Discharge of Contractual Obligations Mutual Agreement All parties to the contract mutually agree to cancel the contract. 73
Novation Discharge of Contractual Obligations The substitution of a new obligation or a new party. 74
Discharge of Contractual Obligations Destruction of the Property A contract may give either party the option of canceling the contract if the property is destroyed. 75
Discharge of Contractual Obligations Operation of Law Applies to voidable contracts. 76
Discharge of Contractual Obligations Assignment of Contract The transfer of one s rights and obligations under a contract. The assigning party retains ultimate liability. 77
Discharge of Contractual Obligations Assignment of Contract Permitted unless specifically restricted in the contract. 78
Remedies for Breach of Contract Contractual Remedies Mediation - An independent third party works with the disputing parties to help them resolve their differences. 79
Remedies for Breach of Contract Contractual Remedies Mediation - If the mediation is not successful the parties can then seek other methods of resolution. 80
Remedies for Breach of Contract Contractual Remedies Arbitration - A disinterested party hears both sides of the dispute and makes a decision as to how it must be resolved. 81
Remedies for Breach of Contract Contractual Remedies Arbitration - The parties are bound by the decision. 82
Remedies for Breach of Contract Contractual Remedies Liquidated Damages - The amount of money the injured party is entitled to receive if the other party is in default. 83
Remedies for Breach of Contract Remedies Provided by Law Damages - The innocent party may sue the defaulting party for money damages. 84
Remedies for Breach of Contract Remedies Provided by Law Specific Performance - The innocent party may seek a court order requiring the defaulting party to carry out the terms and provisions of the contract. 85
Remedies for Breach of Contract Remedies Provided by Law Rescission - If there is a unilateral rescission of the contract, the injured party is entitled to the return of any payments they have made. 86
Statute of Limitations Defines the time within which an injured party has the right to seek a legal remedy. 87
Real Estate Contracts Listing Contracts Serve as the broker s contract of employment. 88
Real Estate Contracts Listing Contracts Is an agency agreements wherein the principal (seller) authorizes the agent (broker) to market the property. 89
Real Estate Contracts Sales Contracts Once it is signed, the seller is committed to sell and the buyer to buy. 90
Real Estate Contracts Option Contracts are unilateral contracts 91
Real Estate Contracts Option Contracts Owner agrees to sell or lease for a certain price within a certain period of time 92
Real Estate Contracts Leases The lessor conveys to the lessee the right of possession and control for a specified period of time. 93
Real Estate Contracts Property Management Contract An agency contract in which the principal (owner) authorizes the agent (broker) to manage the property. 94
Affiliation Agreement Is signed when a salesperson or associate broker joins a brokerage firm. Real Estate Contracts 95
Real Estate Contracts Affiliation Agreement Indicates if salesperson or associate broker be treated as an employee or independent contractor. 96
Affiliation Agreement Must include how broker will compensate the agent. Real Estate Contracts 97
Real Estate Contracts Land Contract The seller holds title until the contract has been satisfied. 98
Real Estate Contracts Land Contract The buyer has equitable title. 99
Real Estate Contracts Land Contract In order to insure good title to the buyer, the deed is signed and placed with an escrow agent. 100
Closing the Transaction The procedure of finalizing the contract. 101
Closing the Transaction Closing In Escrow Doctrine of Relation Back - Conveyance is effective as of the date the deed in place with escrow agent. 102
Closing the Transaction Closings in Georgia are performed by an attorney who represents the lender. 103