Contracts
Essental elements of a volid contract
1. offer and acceptance 2. consideration 3. legal capacity 4. legal objective 5. disclosure (legal description) In Louisiana- we must have "cause" promise is considered to be sufficient cause
Consideration
1. valuable consideration- items of material value 2. good consideration- things of abstract value such as love and affection In Louisiana- CAUSE
Unilateral Contracts
A contract in which only one party is obligated Ex: Option Contract
Bilateral Contract
Both parties are obligated Ex: the seller must sell and the buyer must buy
valid contract
Contains all the essential elements of a contract and is binding and enforceable
mistakes of fact
Errors regarding the facts of a contract
Implied Contract
Formed by the suggestion of the parties acts and conducts
executed contract
One in which all the parties have met all the terms and conditions of the contract
voidable contract
One that is still binding but is flawed; that may be voided if the wrong party chooses In Louisian- it's called relatively null
Option
The owner gives a prospective buyer the right to buy the property at a certain price for a certain period of time
Expressed Contract
The terms are communicated in words, may be written or oral Louisiana- does not require contracts to be in writing, but the Real Estate Commission requires that all real estate contracts be in writing
Lesion Beyond Moiety
When a property is sold for less than one half the market value
Actual Fraud
When there is intent to deceive Ex: lying
contructive fraud
When there is not intent to harm Ex: breach of duty
Contract
a legally enforceable promise or set of promises between competent parties upon legal consideration to do or abstain from doing some legal act, for which, if breached, a remedy is provided by law
earnest money
a monetary deposit accompanying a contract. If either party defaults he loses the amount of the earnest money In Louisiana- a deposit is not required
Specific performance
a monetary deposit is required. If either party fails to meet the obligations of the contract; he may sue for rescission damages, or to have the sale completed In Louisiana- if the deposit is not specified as earnest money then it is considered to be specific performance
accord and satisfaction
allows one party to the contract to substitute a new contractual obligation for his original one
Installment sale
also called land contract or contract for deed; a type of owner financing in which the seller retains title until the full sales price is paid In Louisiana- called Bond for Deed
rescision
cancellation of the contract as if it never existed In Louisiana- if a property is sold for less than half the market value at the of sale the seller can sue to rescinding the sale for up to one year from the time of sale
void contract
has no legal effect and is not binding on either party; no contract exists In Louisiana- it's called Null
Executory contract
one which has been signed but has not been fulfilled. Ex: A signed purchase agreement which has not closed
elclusive right to sell
only one broker is hired as the agent regardless of who sells the property, the seller must pay the broker a commission; most common type
exclusive agency
only one broker is hired, but the may still sell the property himself and not pay a commission
Purchase money mortgage
owner financing in which the buyer receives title at closing
open listing
seller ratains the right to employ as many brokers as he wants
Net listing clause
the broker may legally accept as his commission all money from the sale in excess of the net price specified by the seller. Illegal in some states
equitable title
the buyer's interest in the property after the contract to purchase is signed but before the title is actually transferred
laches
the concept that one may lose his legal rights if he inexcusably fails to exercise them within a reasonable time
Time is of the essence
the contract must be performed within the time limit specified
novation
the substitition of one party to the contract with a new party
mistakes of law
when a party, in full knowledge of the facts comes to an erroneous conclusion as to their legal ramifications