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