Unit 4: Contracts: The Basics

Time Limits for Filing Civil Actions

6 MONTSH - Action against an officer to recover property seized in an official capacity—such as by a tax collector. 1 YEAR - Libel or slander, injury or death caused by wrongful act, or loss to depositor against a bank for the payment of a forged check

Time Limits for Filing Civil Actions

90 DAYS - Civil actions to recover personal property, such as suitcases, clothing, or jewelry alleged to have been left at a hotel or in an apartment; must begin within 90 days after the owners depart from the personal property.

Breach of Contract

A (blank) is a failure to perform on part or all of the terms and conditions of a contract. A person harmed by non-performance can accept the failure to perform or has a choice of three remedies: unilateral rescission, lawsuit for money damages, or lawsuit for specific performance.

Contract

A (blank) is a legally enforceable agreement made by competent parties, to perform or not perform a certain act. Contracts may be express or implied, bilateral or unilateral, executory or executed, and void, voidable, unenforceable, or valid

Bilateral Contract.

A (blank) is an agreement in which each person promised to perform an act in exchange for another person promise to perform.

Minor

A (blank) is not capable of appointing an agent, or entering into an agency agreement with a broker to buy or sell. Brokers dealing with minors should proceed cautiously and should seek an attorney's advice. A contract with a minor is considered voidable by the minor

Waiver

A (blank) is the relinquishment or refusal to accept a right. A person must take advantage of his or her rights at the proper time. If they do not, they give up (waive) their rights.

Voidable Contract

A (blank) is valid and enforceable on its face, but may be rejected by one or more of the parties (induced by fraud, menace, duress).

Offer

A (blank) shows the contractual intent of the OFFEROR. or the person making the offer, to enter into a contract. That offer must be communicated to the OFFEREE, or the person to whom the offer is being made

Valid Contract

A (blank) that is binding and enforceable has all the basic elements required by law.

Assignment

A (blank) will transfer all the interests fo the ASSIGNOR (principal) to the ASSIGNEE. The assignee takes over the assignor's rights, remedies, benefits, and duties in the contract. In this situation, the assignor is not completely released from the obligations for the contract and remains secondarily liable

Ratified

A contract made by a person who is intoxicated or under the influence of legal or illegal drugs can be cancelled when the individual sobers up. Or the contract may be (blank) (approved after the fact) depending on the parties.

Implied Contract

A contract may be an (blank) in which agreement is shown by act and conduct rather than words.

Genuine Assent

A final requirement for mutual consent is that the offer and acceptance be genuine and freely made by all parties. (Blank) does not exist if there is fraud, misrepresentation, mistake, duress, menace, or undue influence involved in reaching an agreement.

Recovation

A power of attorney can be cancelled by the principal at any time by recording a (blank)

Fraud

An act meant to deceive in order to get someone to part with something of value called (blank). An outright lie, or making a promise with no intention of carrying it out, can be fraud. Lack of disclosure—causing someone to make or accept an offer—is also fraud.

Power of Attorney

Any person may give another the authority to act on his or her behalf. The legal document that does this is called a (blank).

Innocent Misrepresentation

When the personunknowingly provides wrong information, (blank) occurs. Even though no dishonesty is involved, a contract may be rescinded or revoked by the party who feels misled.

Unilateral Contract

a (blank) is a contract in which a party promises to perform with expectation of performance by the other party. The second party is not bound to act, but if he or she does, the first party is obligated to keep the promise. An example might be a radio station offering $1,000 to the 100th caller. Some lucky person makes the call and the station pays the money. An option is another example of a unilateral contract.

Unenforceable Contract

a (blank) is a valid, but for some reason cannot be proved by one or both of the parties ( an oral agreement should be in writing because of the statute of frauds).

Tender of Performance

a (blank) is an offerby one of the parties to carry out his or her part of the contract. Usually, a tender is made at the time to close escrow. The person to whom the tender is made must state any objections at that time or they are waived.

Acceptance

a (blank) is an unqualified agreement to the terms of an offer.

Void Contract

a (blank) is no contract at all or no legal effect (to lack of capacity, illegal subject matter).

Mutual Rescission

a (blank) occurs when all parties to a contract agree to cancel the agreement.

Express Contract

a contract ma be a (blank), in which the parties declare the terms and put their intentions in words, either oral or written. A lease or rental agreement, for example, is an express contract

Novation

f the assignor wants to be released entirely from any obligation for the contract, it may be done by (blank). That is the substitution, by agreement, of a new obligation for an existing one, with the intent to extinguish the original contract.

Executed Contract

in a (blank), all parties have performed completely . One of the meanings of execute is to sign, or complete in some way. An executed contract may be a sales agreement signed by all parties.

Executory Contract

in an (blank), something remains to be performed b one or both parties. An escrow that is not yet closed, or a contract not signed by the parties are examples of executory contracts

Methods to Terminate an Offer

• Lapse of time: an offer is revoked if the offeree fails to accept it within a prescribed period • Communication of notice of revocation: notice is filed by the offeror anytime before the other party has communicated acceptance • Failure of offeree to fulfill a condition of acceptance prescribed by the offeror • A qualified acceptance, or counteroffer by the offeree• Rejection by the offeree • Death or insanity of the offeror or offeree • Unlawful object of the proposed contract

Contracts that must be Writing

• An agreement for the sale of real property• An agreement by a purchaser of real property to pay an indebtedness secured by a mortgage or deed of trust upon the property purchased, unless the purchaser's assumption of the indebtedness is provided for in the conveyance of the property

Contracts that must be Writing

• An agreement that cannot be performed within a year from its making. This includes a lease for longer than one year• An agreement to employ an agent, broker, or other person to purchase, sell, or to lease real estate for longer than one year, for compensation or a commission

Parol Evidence Rule

The parol evidence rule extends this meaning and prohibits introducing any kind of outside evidence to vary or add to the terms of deeds, contracts or other writings once executed. Under the parol evidence rule, when a contract is intended to be the parties' complete and final agreement, no further outside promises, oral or written, are allowed.

Principal

The person holding the power of attorney is an attorney-in-fact. When dealing with real property, a power of attorney must be recorded to be valid, and is good for as long as the (principal) is competent.

Release

The person in the contract to whom an obligation is owed may release other party from the obligation to perform the contract.

Lawsuit for specific performance

This is an action in court by the injured party to force the breaching party to carry out the remainder of the contract according to the agreed-upon terms, price, and conditions. Generally, this remedy occurs when money cannot restore an injured party's position. This is often the case in real estate because of the difficulty in finding a similar property.

Duress (menace)

Use of force, known as (blank), which is the threat of violence, cannot be used to get agreement.

Lawsuit for Money Damages

When a party is a breach-of-contract victim, a second remedy is a (blank). If damages to an injured party are expressed in a dollar amount, the innocent party could sue for money damage. This includes the price paid by the buyer, the difference between the contract price, and the value of the property, title and document expenses, consequential damages, and interest

Specific Performance

(blank) is a court action brought about by one party to force the other (breaching) party to fulfill the condition of the contract.

Unilateral Rescission

(blank) is available to a person who enters a contract without genuine assent because of fraud, mistake, duress, menace, undue influence, or faulty consideration. Rescission may be used as a means of discharging a contract by agreement, as we have mentioned.

Consideration

(blank) is something of value, such as a promise of future payment, money, property, or personal services. For example, there can be an exchange of a promise for a promise, money for a promise, money for property, or goods for services.

Forbearance

(blank) or forgiving a debt or obligation, or giving up an interest or a right, qualifies as valuable consideration. Gifts, such as real property based solely on love and affection are good consideration. They meet the legal requirement that consideration be present in a contract.

Undue Influence

(blank) or using unfair advantage is also unacceptable. All can result in a contract to be voidable by the injured party.

Discharge of Contract

(blank) refers to the cancellation or termination of a contract. Contracts are discharged by performance, release, assignment, novation, and breach.

Discharge of Contracts

- Full Performance - Release by one or all of the parties - Assignment - Novation - Breach of contract

Situation that Negate Genuine Assent

-Fraud -Misrepresentation -Mistake -Duress or Menace -Undeu Influence

Time Limits for Filing Civil Actions

2 YEARS - Action on contract, not in writing; action based on a policy of title insurance. 3 YEARS - Action on a liability created by statute; action for trespass on or injury to real property, such as encroachment; action for relief on the grounds of fraud or mistake; attachment.

Time Limits for Filing Civil Actions

4 YEARs - Action on any written contract; includes most real estate contracts. 10 YEARS - Action on a judgment or decree of any court in the United States.

Order of Resolving Contradictory Statements in Contracts

1. Handwritten Content 2. Typewritten Content 3. Attached addenda 4. Preprinted material

4 Requirements for contracts to be legally binding and enforceable

1. Legally competent parties 2. Mutual consent between the parties 3. Lawful objective 4. Sufficient consideration

Counteroffer

If the original terms change in anyway in the acceptance, the offer becomes a (blank), and the first offer terminates.

Mutual Consent (mutual assent)

In a valid contract, all must mutually agree. (Blank) is sometimes called MEETING of the MINDS. It is an offer by one party and acceptance by the other party

Mistake

In contract law, (blank) means an agreement was unclear or there was a misunderstanding in the facts. Mistake does not include ignorance, incompetence, or poor judgment

Acceptable Consideration

Legally, all contracts require (blank). Terms that denote acceptable consideration include valuable, adequate, good, or sufficient consideration.

Statute of Frauds

Most contracts required by law t one in writing are under the (blank). In California, the statute of frauds requires that certain contracts be in writing to prevent fraud in the sale of land or an interest in land.

Legal Capacity

Parties entering into a contract must have (blank) to do so. Almost anyone is capable, with a few exceptions. A person must be at least 18 years of age unless married, in the military, or declared emancipated by the court.

Statute of Limitations

The (blank) places a limit on the length of time a plaintiff has to file a lawsuit. Once the (blank) has expired, any lawsuit that could have been brought to enforce one's contractual rights is terminated just as completely as if they had not existed in the first place

Hold Harmless Clause

The (blank) protects the broker from incorrect information