CA_Principles_06[1]

CA_Principles_06[1] - Principles of California Real Estate...

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1 Lesson 6: Contract Law Principles of California Real Estate Introduction » Contract : An agreement between two or more competent persons to do, or not do, certain things in exchange for consideration. Legal Classifications of Contracts » Contracts may be classified according to certain basic characteristics. » Every contract is: express or implied unilateral or bilateral executory or executed
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2 Legal Classifications of Contracts Express vs. implied » Express contract : One that has been put into words, oral or written. » Implied contract : Created by the actions of the parties, not express agreement. Most contracts are express, not implied. Legal Classifications of Contracts Unilateral vs. bilateral » Unilateral contract : Only one party is legally obligated to perform as promised. » Bilateral contract : Both parties promise to do something and are legally obligated to perform as promised. Most contracts are bilateral. Legal Classifications of Contracts Executory vs. executed » Executory : Contract has not yet been performed, or is in the process of being performed. » Executed : Contract has been fully performed. Note that “executed” may also refer to a contract that has just been signed.
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3 » Contract » Express or implied » Unilateral or bilateral » Executory or executed Summary Legal Classifications of Contracts Elements of a Valid Contract l A valid contract must have: parties with legal capacity mutual consent lawful objective consideration » Contract is not legally binding unless all parties have legal capacity to enter into it. » Two requirements for legal capacity: age mental competence Elements of a Valid Contract Contractual capacity
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4 » In California, a person must be at least 18 (age of majority) to enter into a contract. Someone under 18 is a minor . Minors do not have capacity to appoint agents or enter into contracts. » Parent or legal guardian may enter into a binding contract on minor’s behalf. Contractual Capacity Age of majority » Real estate contract in which one party is a minor is void . No legal effect. Neither party can enforce it. » Other contracts (not related to real estate) signed by minor are voidable , by the minor. Other party can’t enforce contract. Minor can choose to enforce contract, through parent or guardian. Contractual Capacity Age of majority » Exception : Emancipated minor may enter into any type of contract, including real estate. (Bring emancipation documents to closing.) » Minor can be emancipated by: marriage military service court order Contractual Capacity Age of majority
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5 » Mentally competent : Of sound mind. If one party has been declared mentally incompetent, contract is void . Guardian can enter into contracts on behalf
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This note was uploaded on 09/06/2011 for the course FI 365 taught by Professor Staff during the Spring '11 term at S.F. State.

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CA_Principles_06[1] - Principles of California Real Estate...

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