Implied: is a contract which occurs by the actions of the parties (in other words, by the way people behave). When the passenger gets in a taxi, he implies by his actions, he will pay the driver of the taxi when he gets to his location. Many times, this type of contract is less than desirable in real estate since it will be a case of an agent implying by his behavior that he represents a seller when he legally represents a buyer in the transaction. If the wronged person can prove the case, the broker will not be able to collect his commission. Executory: is a contract in process. Something remains to be completed such as the issuing of the deed, or a contingency has not been met. Executed: is a contract completed. It is finished and all terms have been met and satisfied.
Formal Contract: was originally written under seal, meaning the wax seal of the parties. This has evolved into the written, signed contract by the parties, valid and enforceable. Informal Contract: an oral or Parol contract, usually not enforceable. End of Page 9 . Contract Negotiation In the process of obtaining a contract, certain negotiations must take place. In an offer to purchase, the buyer offers his best price for the property and the seller agrees to the price or sends the offer back to the buyer with a counter offer. Whoever is making the offer is the Offeror. Whoever is receiving the offer is the Offeree. The buyer (Offerer) gives an offer to the Seller (Offeree). The seller (offeror) gives to the buyer (offeree) a counter offer. An offer is not a contract until it has been mutually agreed upon and signed by both parties. End of Page 10 . Ways an Offer can be Terminated
The ways an offer can be terminated: An offer is withdrawn by the offeror. The time for an offer has passed and the offer is dead. The death or insanity of either party. A counter offer is given, making the first offer dead. The offer is accepted and signed by both parties, creating a CONTRACT. The offer is rejected by one party completely. The property in question is destroyed. End of Page 11 . Ways a Contract can be Terminated Performance: the contract is completed Mutual rescission: both parties agree to cancel the contract. Impossibility of performance: an earthquake hits the property and both parties agree to rescind the contract. Operation of Law: bankruptcy of either party or eminent domain of the property. Breach: one or the other or both of the parties have broken the promises made. If one has breached and the other has not, a remedy may be sought by the injured party. If both have breached the contract, a new contract may be written or both may rescind the contract. A breach of contract means a failure to perform the promises as agreed. If a breach occurs on one side of the contract, the injured party on the other side may wish to seek a remedy. The injured party may sue by any of three methods: 1. Suit for Cancellation: (Rescind the contract) the court restores the parties to their original position before the contract.
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- Fall '16
- Contract Law