© 2008 by South-Western, Cengage Learning

Chapter 8Chapter 8

Charles J.Jacobs

Thomas E.Gillett

© 2008 by South-Western, Cengage Learning

Georgia Real EstateGeorgia Real EstateAn Introduction to the ProfessionAn Introduction to the Profession

Seventh EditionSeventh Edition

Chapter 8Chapter 8

Contract LawContract Law

© 2008 by South-Western, Cengage Learning

Expressed – oral or verbal declaration

Implied - created by action

© 2008 by South-Western, Cengage Learning

Bilateral and Unilateral ContractsBilateral and Unilateral Contracts

© 2008 by South-Western, Cengage Learning

Essential ElementsEssential Elements

Legally Competent Parties

Mutual Agreement

Lawful Objective

Consideration

© 2008 by South-Western, Cengage Learning

Legal Effect of ContractsLegal Effect of Contracts

Valid – all essential elements present

Void – missing at least one essential element

no legal effect & not a contract

Voidable – one or more elements may be removed by the injured party

Invalid – once was valid but validity has ceased

© 2008 by South-Western, Cengage Learning

Legal Effect of ContractsLegal Effect of Contracts

Court would allow and uphold

Court would notallow and uphold

© 2008 by South-Western, Cengage Learning

Essential ElementsEssential Elements

Legally Competent PartiesMinors

Intoxicated Persons

Power of AttorneyAttorney-in-fact

Corporations

© 2008 by South-Western, Cengage Learning

Essential ElementsEssential Elements

Mutual Agreement - Meeting of the minds

Offer, Acceptance &

Communication

Counteroffer

© 2008 by South-Western, Cengage Learning

Meeting of the MindsMeeting of the Minds

© 2008 by South-Western, Cengage Learning

Meeting of the MindsMeeting of the Minds

© 2008 by South-Western, Cengage Learning

Meeting of the MindsMeeting of the Minds

© 2008 by South-Western, Cengage Learning

Essential ElementsEssential Elements

Mutual AgreementFraud

Innocent Misrepresentation

Mistake

Contractual Intent

Duress, Menace, Undue

Influence

© 2008 by South-Western, Cengage Learning

Essential ElementsEssential Elements

Lawful Objective

Consideration – Something of valueExchange of Promises

“For ten dollars and other good and valuable consideration”

Earnest Money is not consideration

© 2008 by South-Western, Cengage Learning

Essential ElementsEssential Elements

Contract in WritingStatue of Frauds

Parole Evidence Rule

Executory, Executed, Execute

© 2008 by South-Western, Cengage Learning

PerformancePerformance

Most contracts are discharged by being fully performed

Novation – Substitution of new contract or new parties

Deceased Party

Property Damage

© 2008 by South-Western, Cengage Learning

Breach of ContractBreach of Contract

Partial performance

Unilateral rescission

Lawsuit for damages

Lawsuit for specific performance

Liquidated damages

Mutual Rescission

Statute of Limitations

© 2008 by South-Western, Cengage Learning

Key TermsKey Terms

Breach of contract

Competent party

Consideration

Contract

Counteroffer

Duress

Fraud

Liquidated damages

Power of attorney

Specific performance

Void contract

Voidable contract