Module 6 Flashcards
Statute of Frauds
Certain contracts (including real estate contracts) must be in writing to be enforceable by law.
Doesn’t require any particular form be used for the written contract.
EXEMPTION: when a contract is verbal but parties begin to complete the contract (then it can be enforceable)
Vendors and Purchasers Act
Several rights and obligations that are incorporated into every agreement:
1. seller isn’t bound to produce title deed or other evidence of title except as are in the seller’s possession or control
2. buyer shall search the title at buyer’s expense
3. seller has 30 days to remove any objection made to the title - if seller is unable or unwilling, seller may cancel contract and return deposit
4. taxes, local improvements, insurance premiums, rent and interest shall be adjusted as at the date of closing
5. conveyance shall be prepared by the seller and the mortgage by the buyer
6. buyer is entitles to possession of the receipt of rent and profits upon closing date
Representation agreement
signed between brokerage and seller/buyer
seller or buyer customer service agreement
signed between brokerage and seller or buyer
agreement of purchase and sale
signed between seller and buyer
lease
signed between landlord and tenant
Parol Evidence Rule
Oral evidence is inadmissible in court to vary or contradict the terms of a written contract, except in a cause of fraud or mistake.
aka - you cannot say someone said something that contradicts the written contract and have it hold up in court.
Privity of Contract
Only parties to a contract can enforce it or be bound by it. If you’re just witnessing the contract, and aren’t actually party to the contract, you aren’t involved in enforcing it.
Eg. a brokerage can sue the seller for real estate remuneration, but the salesperson cannot individually (they need the consent of the brokerage, as the agreement is between the brokerage and the seller).
6 elements for a contract to be enforceable
- offer and acceptance (remain open for reasonable time, accepted within timeframe, communicated to offeree. If accepted, must be unconditional, communicated to offeror in the same manner made by offeror (e.g. email), and occur before specific time limit).
- capacity of the parties (can’t be minor (18), mentally impaired, intoxicated) Non est factum - need to know what is being signed - can’t sign something if you don’t know what it is.
- consideration (each party gets something of value - buyer gets house, seller gets money. 3 parts - value, lawful, and future or current consideration (not past consideration))
- definite and clear (terms stated clearly)
- lawful object (must be lawful arrangement - cannot buy property with embezzled money)
- genuine intention (both parties consent to terms genuinely, no duress or undue influence)
Under seal
When a contract has no exchange of value (e.g. a buyer making their offer open until a certain time), it’s still considered enforceable if signed under seal
lack of genuine intention: common mistake
both parties of the contract know the intention of the other, accept it, but are mistaken about an underlying fact.
lack of genuine intention: mutual mistake
parties misunderstand each other and are at cross-purposes/have contrary understanding
lack of genuine intention: unilateral mistake
one party is mistaken about a fundamental aspect of the contract (buyer believes the property is 1 acre, buyer knows that it’s not but says nothing - buyer proceeds with purchase based on mistaken fact).
lack of genuine intention: innocent misrepresentation
a statement by one party of fact that is wrong, but honestly believed to be true.
Cannot recover damages if it’s an innocent misrepresentation. Not fraudulent or negligent.
lack of genuine intention: fraudulent misrepresentation
3 elements
- misrepresentation is made with the knowledge of its falsity
- purpose is to induce other party to enter contract
- misrepresentation relied on to the other party’s prejudice
Deceived party may resist enforcement of contract and seek damages.
lack of genuine intention: negligent misrepresentation
If there’s a contractual relationship between parties and a misrepresentation is made without reasonable verification, the person who was misled may bring a lawsuit (may include damages). This can occur when a buyer has relied on a real estate salesperson who reps the seller.
Void contract
Contract never came into effect - no force. The agreement doesn’t exist. No one can enforce it.
Voidable contract
It is enforceable, and valid until rendered void.
E.g. signed by someone who is intoxicated - intoxicated person is able to accept the contract as valid, or declare it void if they can prove their were so intoxicated they didn’t know what they were signing.
Illegal contract
not enforceable in court.
Breach of contract
failure to fulfill or perform an obligation under contract by one of the contracting parties.
fundamental breach
The breach goes to the root of the contract.
impacted party can:
- accept breach, release themselves
- accept breach, seek damages
- treat contract as still in effect
If breach doesn’t go to root, might still be able to sue for damages but contract is still in effect (not discharged).
remedies for a breach of contract: rescission
cancel the contract
remedies for a breach of contract: damages
compensation for losses incurred.
every breach may give rise to this remedy (must prove amount of loss)
remedies for a breach of contract: quantum meruit
reasonable sum for services rendered
Implies work has already been done that needs to be paid for
