Chapter 6 (Contract Law)

Buyer Representation Agreements

A buyer representation agreement is a written employment contract between a prospective property buyer and a real estate firm. The buyer hires the firm to locate a suitable property for the buyer to purchase. In Washington, although a firm may act as a buyer's agent without a written agreement, the firm cannot sue the buyer for compensation unless their agreement is in writing.

Purchase and Sale Agreements

A purchase and sale agreement is a contract between a buyer and a seller. It sets forth the terms on which the property is being bought and sold: price, financing, closing date, and so on. The statute of frauds requires such an agreement to be in writing. In most transactions, a purchase and sale agreement form, filled out and signed by the buyer, is submitted to the seller as the buyer's offer to purchase. If the seller decides to accept the offer, he signs the form and creates a binding contract. If the seller wants to change any of the terms offered, he can make a counter-offer to the buyer. Now the seller is the offeror and the buyer is the offeree.

Age Eighteen (capacity)

Eighteen years of age is the age of majority in Washington. Minors (those under the age of 18) do not have capacity to contract. If a minor signs a contract, it is voidable by the minor; in other words, it cannot be enforced against him. On the other hand, the minor can enforce the contract through a parent or guardian if she wants to. Example: A 16-year-old signs a purchase and sale agreement, agreeing to buy a house. The seller cannot enforce the contract against the minor, although the minor could compel the seller to honor the terms of the agreement. The purpose of this rule is to prevent people from entering into legally binding agreements when they may be too young to understand the consequences.

Escrow Instructions

Escrow instructions are instructions from a buyer and a seller to an escrow agent. They set forth the obligations of the buyer and seller and the conditions under which the agent will disburse funds and deliver the deed to close the transaction. The buyer and the seller may each execute separate escrow instructions, or joint instructions may be used. The instructions are a binding contract, usually one that complements an existing purchase and sale agreement between the parties.

Legal Classification of Contracts

Every contract is either express or implied, either unilateral or bilateral, and either executory or executed.

Legal Status of Contracts

For terms are used to describe the legal status of a contract: a contract is void, voidable, unenforceable, or valid.

Rescission

In a rescission, the parties to a contract agree to terminate it, and undo any steps they've already taken to carry it out. If either has paid the other any money or given the other any property, the money or property will now be returned. By rescinding the contract, the parties put themselves back in the positions they were in before the contract was formed. It's as if the whole thing never happened.

counteroffer

It's a counteroffer when an offeree agrees to some of the terms of the original offer, but changes other terms. A counteroffer is also called a 'qualified acceptance.' Unlike an acceptance, a counteroffer does not create a binding contract. Instead, it terminates the original offer and replaces it with a new offer. When there is a counteroffer, the roles of the parties are reversed: the original offeror becomes the offeree and can accept or reject the revised offer. If he chooses to accept the counteroffer, there is a binding contract. If the counter offer is rejected, the parry making the counteroffer cannot go back and accept the original offer. The original offer was terminated by the counteroffer. Example: Palmer offers to but Harrison's property on the following terms: the purchase price will be $450,000, the downpayment will be $30,000, and the closing date will be January 15th. Harrison agrees to all of the terms except the closing date, which she wants to be February 1st. By changing one of the terms, Harrison has rejected Palmer's initial offer and made a counteroffer. Now it is up to Palmer to either accept or reject Harrison's counteroffer.

Full Performance

Most contracts are discharged by full performance. When each party has performed as promised, their contract is executed, and their contractual relationship is at an end. They have no further legal obligations to one another based on the contract.

Discharging a Contract

Once there is a valid, enforceable contract, it may be discharged by: 1) full performance, or 2) agreement between the parties

Terminating an offer

Sometimes circumstances change after an offer has been made, or perhaps the offeror has had a change of heart. If an offer terminates before it is accepted, no contract is formed. There are many things that can terminate an offer before it is accepted, including: -revocation by the offeror -lapse of time -death or incompetency of the offeror -rejection of the offer, -a counteroffer

Duress

A contract is signed under duress if one party uses or threatens to use force or constraint to compel the other to sign. A contract entered into under duress is voidable. When someone has signed a contract, the law presumes that he freely consented to its terms. The other party can enforce the contract unless it can be proved in court that fraud, or another negative factor, was involved. A person who signs a contract without reading it is not excused from performance. A person who is unable to read the contract should always ask someone he trusts to read or translate the document for him.

Unilateral VS Bilateral

A contract is unilateral if only one of the contracting parties is legally obligated to perform. That party has promised to do a particular thing if the other party does something else; but the other party has not promised to do anything, and is not legally obligated to do anything. Example: In an opening listing agreement, a seller promises to pay a real estate brokerage commission if the firm finds a buyer for the property. The firm does not promise to try to find a buyer, but if it does, the seller is obligated to pay. An open listing agreement is a unilateral contract. A bilateral contract is formed when each party promises to do something, so that both parties are legally obligated to perform. Most contracts are bilateral. Example: In a purchase and sale agreement, the seller promises to transfer title to the buyer, and the buyer promises to pat the agreed price to the seller. This is a bilateral contract. Each party has made a promise, and both are obligated to perform.

Offer

A contract offer shows the willingness of the person making it (the offeror) to enter into a contragct on the sted terems. To be valid, an offer must meet two requirements: 1)It must express a willingness to contract. Whatever words make up the offer, they must clearly indicate that the offeror intends to enter into a contract. 2)It must be definite and certain in its terms. A vague offer that does not clearly state what the offeror is proposing is unenforceable. Note that an advertisement that lists a property's price is not considered a contract offer; it is merely an invitation to negotiate.

valid

A contract that is not void, voidable, or unenforceable is a valid contract. It meets all of the requirements for contract formation, and its contents can be proved in court. If either party fails to perform as promised, the other can sue to have the contract enforced. Occasionally, there will be two valid contracts that are part of the same transaction, but that are in conflict with each other. In this case, the more recent of the contracts takes precedence. For instance, provisions in a purchase and sale agreement may conflict with the escrow instructions. The agreement in the escrow instructions would prevail, because it was executed more recently than the listing agreement.

Land Contracts

A land contract is also called an installment sales contract or a contract for deed. A land contract is a financing agreement between a buyer and a seller. The buyer agrees to pay the purchase price in installments over time, rather than paying the seller the full price at one time. Under the terms of most land contracts, the buyer (called the vendee) takes possession of the property immediately. The seller (the vendor) retains legal title to the property until the full purchase price has been paid. When the vendee makes the final contract payment, the vendor delivers the deed.

Leases

A lease temporarily transfers the right to possession of a piece of property from the owner (the landlord) to a tenant. It is both a contract and the conveyance of an interest in the property—a leasehold estate. As a contract, the lease should set forth all of the terms of the agreement between the landlord and the tenant: the amount of rent and when it is due; the rights and responsibilities of the parties; and the duration of the tenancy. A lease must meet all of the requirements for a valid contract. The statute of frauds requires a lease for more than one year to be in writing and signed.

Competent

A person must be also be competent to have capacity to contract. If a person has been declared incompetent by a court, any contract she signs is void. If someone is declared incompetent after signing a contract, the contract may be voidable at the discretion of the court-appointed guardian. A contract entered into by a person who was temporarily incompetent (for example, under the influence of alcohol or drugs) may be voidable if he takes legal action within a reasonable time after regaining mental competency. For example, Joan has Alzheimer's disease. A court has declared Joan legally incompetent, and has appointed a legal guardian for her. An unscrupulous developer talks Joan into signing a contract to purchase some land. This contract is void. It is not a contract at all in the eyes of the law, and it cannot be enforced by either side. A legal guardian can enter into contracts on behalf of a minor or an incompetent person. Such a contract is binding on both parties.

Void

A void contract is no contract at all; it has no legal effect. This most often occurs because of the essential elements, such as mutual consent or consideration is absent. Example: Talbot signed a contract promising to deed some property to Worth, but Worth did not offer ant consideration in exchange for Talbot's promise. Since the contract is not supported by consideration, it is void. A contract that doesn't fulfill one of the basic requirements we've discussed may be void as a result. A contract is void if: there is no consideration, a party is mentally incompetent, the objective is unlawful, or there is no consent. A void contract has no legal effect whatsoever. The parties are in the same position they'd be in if they had never attempted to make a contract. A void contract can be disregarded. Neither party is required to take any action to withdraw, because there is really nothing to withdraw from.

Fraud

Acceptance isn't valid unless it's given freely. A contract can't be enforced against someone who is able to show that his or her consent resulted from fraud or other negative influences. A person commits fraud by misrepresenting an important fact to someone who relies on the misinformation. Actual fraud- occurs when the person making the statement either knows the statement is false and makes it with an intern to deceive , or doesn't know whether or not the statement is true but makes it anyway. For instance, if the seller knows of a serious defect in the wiring, yet does not disclose this fact to the buyer, it is actual fraud. Constructive fraud-occurs when a person who occupies a position of confidence and trust, or who has superior knowledge of the subject matter, makes a false statement with no intent to deceive. For example, if a seller innocently points out incorrect lot boundaries, it may be constructive fraud.

rejection

After rejecting an offer, the offeree can't simply change her mind and accept it. The rejection terminated the offer. Example: Howard offers to purchase Maria's house for $235,000. Maria rejects the offer the next day. The following week, Maria changes her mind and decided to accept Howard's offer. But her acceptance at this point does not create a contract, because the offer terminated with her rejection.

Novation

An alternative to assignment that works in some situations is novation. With a novation, as with an assignment, one of the original parties withdraws and is replaced by a new party. But in a novation, the withdrawing party is released from any further liability. A novation always requires the consent of the other party. The term novation is also used to describe the substitution of a new agreement for an old agreement between the same parties. Nova is Latin for new. For instance, Jody has a two-year lease on some office space. At the beginning of the second year of her lease term, she asks the landlord if he'd be willing to give her a longer lease. The landlord readily agrees, since Jody has proved to be a good tenant. Jody and the landlord sign a new five-year lease that takes the place of their old lease. This is a novation. The parties are the same, but the terms of the contract have changed.

Executory VS Executed

An executory contract is one that has not yet been performed, or is in the process of being performed. An executed contract has been fully performed; the parties have fulfilled he terms of their agreement. In this sense, the terms "executed" and "performed" mean the same thing. However, "executed" could also mean simply refer to signing it, not to performing or fulfilling it. The party or parties who execute a document have signed it and taken any other steps needed to make it legally binding (for example, in the case of a will, having it witnessed). Which meaning is intended in a particular case will usually, be clear from context. For example, John has agreed to sell his house to Simon, and they've signed a purchase and sale agreement. John has arranged for a pest inspection and a title report, and Simon has applied for financing. At this point, their contract is executory. When both John and Simon have done everything they've promised to do and the transaction closes, their contract has been executed.

Express VS Implied

An express contract is one that has been put into words. It may be written or oral. Each party to the contract has stated what he or she is willing to do and has been told what to expect form the other party. An implied contract, or contract by implication, is created by the actions of the parties, not by express agreement. For instance, Alan rents an apartment to Barbara and Jim for one year. They have a written lease, an express contract. When the lease expires, Barbara and Jim stay on and continue to pay rent. Alan accepts the rent. They now have an implied contract. Most contracts are express, not implied.

revoke

An offeror can revoke an offer at any time before the offeree accepts it. Of course, the offeror must notify the offeree of the revocation. Even if the offer was supposed to remain open until a particular date, the offeror can revoke it before that date arrives. For example, on May 1st, Francis offers to buy some land from Kent for $62,000. The offer states that it will remain open until May 7th. On May 4th, while Kent is still trying to make up his mind about the sale, Francis notifies him that the offer is revoked. That terminates the offer. Many offers included a deadline for acceptance. If a deadline is set and acceptance is not communicated within the time allotted, the offer terminates automatically. If a time limit is not stated in the offer, a reasonable amount of time is allowed. What is reasonable is determined by the court if a dispute arises. If the offeror dies or is declared incompetent before the offer is accepted, the offer terminates.

Option Agreements

An option is a contract that gives one party the opportunity to do something, without obligating him or her to do it. In the real estate field, the most common type of option is an option to purchase. An option to purchase gives one party (the optionee) an opportunity to buy property belonging to the other party (the optionor) at a certain price during a specified period. The optionor isn't allowed to sell the property to anyone other than the optionee until the option period expires. Here's how an option to purchase works. Cal (the optionor) gives Rita (the optionee) the right to purchase his home for $225,000 in the next 90 days. In exchange, Rita gives Cal a sum of money called the option money. During the 90-day period, if Rita decides she wants to buy the property, she can exercise her option. Then Cal must sell Rita the property at the agreed price. If Rita decides not to buy the property, Cal can keep the option money. Option money is nonrefundable. Consideration must pass from the optionee to optionor. It can be any amount, but it can't be simply a statement of consideration. An option agreement concerning real property must be in writing, and the document should state all of the terms of the potential sale (the terms that would be included in a purchase and sale agreement). Sometimes, an option is called a unilateral contract, because the optionee has not promised to do anything. But when an option is exercised, it becomes an executory bilateral contract. An option may be assigned, with two exceptions: if there is a provision prohibiting assignment, and if the consideration took the form of an unsecured promissory note. An optionee may have the option agreement recorded, and is likely to do so if the option period is a matter of months. Whether the agreement is recorded or not, until an option is exercised, it is only a contract right—not an interest in the property. An option is not the same as a right of first refusal, which gives someone the first opportunity to purchase property if it becomes available. An option is not the same as a right of first refusal, which gives someone the first opportunity to purchase property if it becomes available.

unenforceable

An unenforceable contract is one that cannot be enforced in court for one of the following reasons: 1) its contents cannot be proved 2) it is voidable by the other party 3) the statute of limitations has expired. 1) A contract is considered unenforceable if its contents can't be proved in court. This is often a problem with unwritten contracts. Lack of proof can also make a written contract unenforceable. If a written contract is too vaguely worded and the parties are unable to prove what they intended it to mean, a court will refuse to enforce it. 2) If a contract is voidable by one of the parties, it is unenforceable by the other party. (Note that the party who has the option of voiding the contract can choose instead to enforce the contract against the other party.) 3) A statute of limitations is a law that sets a deadline for filing a lawsuit. Unless an injured party files suit before the deadline set by the applicable statute of limitations, his legal claim is lost forever. The purpose of a statute of limitation is to prevent one person from suing another too many years after an event, when memories have faded and evidence has been lost. In Washington, the statute of limitations requires most contract lawsuits to be filed within six years after the breach of contract occurred if the contract was in writing. If the contract was oral, the time limit is three years. Once the time limit set by the statute of limitations has passed, a lawsuit to enforce the contract can no longer be brought.

Specific Performance

As we said, damages are intended to compensate the non-breaching party for the harm that resulted from the breach. But sometimes monetary compensation isn't enough. The non-breaching party wants to make the other party do what she promised to do. When a court orders the breaching party to carry out the contract, it is called an order of specific performance. Specific performance is not available in all lawsuits based on breach of contract. If the court decides that a damages award would be an adequate remedy, it will not order specific performance. When the subject of a purchase contract is one of a kind, then specific performance is an appropriate remedy. A damages award wouldn't enable the buyer to obtain an identical one, because there isn't another one just like it. Specific performance is sometimes used to enforce a contract to purchase real estate, because a piece of real property is unique.

Rescission

As you've learned, rescission involves undoing any steps taken to carry out the contract, to put the parties back in their original positions. Sometimes rescission is the result of an agreement between the parties. In other cases, court-ordered rescission is a remedy for breach of contract.

Cancellation

Cancellation is similar to rescission, but there's an important difference. In canceling a contract, the parties agree to terminate it without undoing whatever steps they've already taken. If money has changed hands, the party who received it is allowed to keep it. Here is an example of cancellation: The buyer signs a purchase and sale agreement and makes a $2,000 earnest money deposit. He later changes his mind and asks to be released from the contract. The sellers agree, on condition that they can keep the deposit. This is cancellation, as opposed to rescission.

voidable

In some cases, a contract that fails to meet one of the basic requirements is voidable. This means that one of the parties has the right to withdraw from the contract if she chooses to do so. If a minor signs a contract, it is voidable by the minor or his or her legal guardian. A contract is also voidable if one of the parties was induced to enter into it by fraud, undue influence, or duress. The victimized party has the option of going through with the contract or getting out of it. Unlike a void contract, a voidable contract is legally binding unless action is taken to undo it. The party wishing to withdraw must ask a court to rescind(revoke,cancel,appeal) the contract. Unless the party with the right to have the contract rescinded takes legal action within a reasonable time, the court may rule that the contract has been ratified (sign or give formal consent to making it officially valid). When a contract is voidable by one party, the other party is said to have an unenforceable contract.

assignment

In various circumstances, one of the parties to a contract may want to withdraw and have someone else take his place. This is called assignment. One of the original parties, the assignor, assigns his interest in the contract to a new party, the assignee. Here is an example of an assignment of contract. Chad leases a house from Larry. Three months later, Chad gets a job in another city and has to move. Chad arranges for his friend Janice to take over his lease. She moves in and starts making the rental payments to Larry. Chad has assigned his contract with Larry to Janice. An assignment does not actually discharge a contract. The party who assigned his interest, the assignor, is still secondarily liable to the other original party. If the assignee doesn't fulfill the contract, the other party can sue the assignor as well as the assignee. For instance, after Chad assigned his lease to Janice, Janice defaulted on the rental payments. Chad is still liable to the landlord, Larry. As a general rule, one party has the right to assign his interest in the contract without the other's permission, unless there is a clause in the contract expressly forbidding that.

Liquidated Damages

Liquidated damages is a remedy that the parties agree to in advance, by including a special provision in their contract. A liquidated damages provision states that in the event of a breach by one party, the other party will be entitled to a specified sum of money. That money is called liquidated damages. For example: Suppose that Able and Baker included a liquidated damages provision in their contract. The provision states that if Baker breaches the agreement, he will pay Able $3000, and that will sever as full compensation for the breach. Baker fails to deliver the hinges to Able on time, Able must purchase them from another supplier, and that costs her an extra $5000. But because of the liquidated damages provision i the contract, Able is only entitled to receive $3000 from Baker. She can't sue for any additional amount, even though her actual damages were greater than $3000. The earnest money deposit in a purchase and sale agreement is often treated as liquidated damages. The contract provides that the seller will be allowed to keep the deposit if the buyer breaches the contract.

Mutual Consent

Mutual consent is the second requirement for a valid contract. Each party must consent to the agreement. Once someone has signed a contract, consent is presumed, so no contract should be signed until its contents are fully understood. A person can't use failure or inability to read an agreement as an excuse for nonperformance. An illiterate person should have a contract explained thoroughly by someone trustworthy. Mutual consent is sometimes called "meeting of minds" It's achieved though the process of offer and acceptance.

Representing Another

Often, one person has the capacity to represent another person or entity in a contract negotiation. For instance, the affairs of minors and incompetent persons are handled by parents or court-appointed guardians; corporations are represented by properly authorized officers; partnerships are represented by individual partners; deceased persons are represented by executors or administrators; and a competent adult can appoint another competent adult to act on her behalf through a power of attorney. In each of these cases, the authorized representative can enter into a contract on behalf of the person represented.

Capacity

The first requirement for a valid contract is that the parties have the legal capacity to enter into a contract. A person must be at least 18 years old to enter into a valid contract, and she must also be competent.

Consideration

The fourth element of a valid contract is consideration. Consideration is something of value that one party to a contract gives to the other. It can be anything of value: money, property, services, or a promise to provide something of value in the future. The parties to a contract must exchange consideration. Each must give or promise the other something of value. In a typical real estate sales transaction, the consideration is the seller's promise to convey title, and the buyer's promise to pay the agreed price. For example, Aunt Martha might promise to pay her nephew Charles $1000 if he promises not to smoke. As a general rule, a contract is enforceable as long a s the consideration has value, even though the value of the consideration exchanged is unequal. A contract ot sell a peice of property worth $120,000 for $105,000 is enforceable. However, in cases where the dispariy in vlaue is quire large (for example, a contract to sell a piece of property worth $185,000 for $55,000), a court may refuse to enforce the contract. This is particularly likely to happen if the parity shave unequal bargaining power (for instance, if the buyer is a real estate developer and the seller is elderly, uneducated, inexperienced in business).

Compensatory Damages

The most common remedy for breach of contract is compensatory damages. A damages award is an amount of money the court orders the breaching party to pay the other party. Compensatory damages are intended to compensate the non-breaching party for losses resulting from the breach. Let's look at an example. Adam sells his home to Carrie, who gives notice to her landlord that she will be moving out. She also pays for an appraisal, a credit report, and a title search. At the last moment, Adam changes his mind about selling. Carrie sues for damages. The court orders Adam to pay her a sum of money that will cover her out-of-pocket expenses. These compensatory damages include the amount she spent on the transaction and the costs she incurred moving into a new apartment.

Agreement between the parties

The parties to a contract can agree to discharge the contract in any of the following ways: -rescission -cancellation -assignment -novation

Lawful Objective

The third requirement for a valid contract is a lawful objective. If someone agrees to commit an unlawful act, a court will not enforce the contract on behalf of either party. This rule doesn't just cover murders for hire or drug deals; it applies to any contract involving a violation of law or public policy. Here's an example. A property owner enters into a contract with a builder. The builder agrees to build a hotel on the owner's property. However, the zoning law does not allow the property to be used for this purpose. The objective of the agreement is unlawful. The contract is void and can't be enforced by either party.

The writing requirement

The writing requirement comes from the statute of frauds. This is a state law that lists the types of contracts that are not valid unless they're in writing. A contract concerning real estate, such as a purchase and sale agreement, listing agreement, or lease for more than a year, is subject to the statute of frauds. If such a contract is not put into writing, it is unenforceable. However, once the contract has been fully performed, neither party can use the statute of frauds to undo the transaction. In Washington, the statute of frauds applies to: -Any agreement to convey an interest in real property ( such a purchase and sale agreement) -Any agreement that, by its terms, will not be performed within one year after it is made ( such as a two-year lease) -Any agreement to assume the debts of another (such as the assumption of a mortgage) -Any agreement to employ an agent for compensation to sell, buy, lease, or exchange real property (such as a listing agreement) The "writing" required by the statute of fraud doesn't have to be written in one entire doc. It could be a note or memorandum about the agreement or a series of letters will suffice, as long as the writing: 1) identifies the subject matter of the contract, 2) indicates an agreement between the parties and its essential terms, and 3) is signed by the party or parties to be bound If the parties fail to put a contract that falls under the statute of frauds in writing, the contract is usually unenforceable. However, the court occasionally, will enforce such an unwritten agreement if there is evidence that the contract exists and evidence of its terms. But this is very rare.

Tender

To be entitled to sue for breach of contract, the non-breaching party must be ready to carry out her side of the bargain. So before filing a lawsuit, the non-breaching party is usually required to make a tender. A tender is an unconditional offer to perform as agreed. Here's an example: Erin sells her home to Casey. Eight weeks later Casey fails to complete the purchase. Before Erin can sue Casey, she must first make a tender. In this case that means she must attempt to deliver the deed. Casey's refusal to accept the deed will place him in default. A tender is not necessary if there is an anticipatory repudiation. When one party repudiates the contract by making a definite statement that he is not going to perform as agreed, the other party can sue without making a tender. For example, if Casey notifies Erin in writing that he doesn't plan to go through with the purchase, Erin does not have to tender the deed before filing suit against Casey.

acceptance

To create a binding contract, the offeree must communicate her acceptance to the offeror before the offer terminates. Offer and acceptance is sometimes referred to as a meeting of the minds. The date on which acceptance occurs is considered to be the date of the contract. sometimes an offer specifies how the acceptance must be communicated to the offeror. For example, an offer to purchase might require the seller's acceptance to be delivered to the buyer's agent. Unless the acceptance is carried out in the specified manner, no contract is formed. If no time or manner of acceptance is stated in the offer, a reasonable time and manner is implied.

Elements of a Valid Contract

To make any type of contract valid and binding, so that it will be enforced by a court, four elements are needed. 1) legal capacity to contract 2) mutual consent 3) a lawful objective, 4) consideration

Undue influence

Undue influence refers to persuading a person to sign a contract by taking advantage of his trust, weakness of mind, or distress. For example, Mary Ann is a real estate agent, and a trusted friend of her elderly next-door neighbor, Claire. Mary Ann talked Claire into selling her home to Mary Ann at well below market value. This is undue influence. Undue influence can be described as persuasion strong enough to overpower another person's will, and prevent that person from acting intelligently and voluntarily. Undue influence occurs where there is a special legal relationship based on trust, like an agent-seller, attorney-client, or priest-parishioner relationship. A contract signed as a result of undue influence is voidable by the party subjected to that undue influence.

Breach of Contract

When one of the parties to a contract doesn't perform as agreed, without discharging the contract and without legal excuse, it's a breach of contract. If one party breaches a contract, the other party has the right to sue. There are four legal remedies for breach of contract. They are: 1)rescission, 2)compensatory damages, 3)liquidated damages, and 4)specific performance.

Contract

an agreement between two or more competent persons to do or not do certain things in exchange for consideration. An agreement to sell a car, deliver lumber, or rent an apartment is a contract. If the contract meets minimum legal requirements, it can be enforced in court.