Title of the Assignment: It is a settle principle an English law that,”to creat a contract their must be a common intention of the parties to enter into legal explained and illustrate

 

 

Title of the Assignment:

It is a settle principle an  English law that,”to creat a contract their must be a common intention of the parties to enter into legal explained and illustrate

 

 

 

 

Table of content:

(1) LETTER OF SUBMISSION                                                              1

(2) ACKNOWLEDGEMENT                                                                2

(3) EXECUTIVE SUMMERY                                                               3

(4) SUMMARY OF IMPORTANT ISSUES FOR CONTRACT               4

(5) INTRODUCTION                                                                             5

(6) REAL ESTATE CONTRACT                                                         6

(7) IN WRITING                                                                   8

(9) OFFER AND ACCEPTANCE                                                       9

(10) DEED SPECIFIED                                                     10

(11) CONTINGENCIES                                                    11

(12) DATE OF CLOSING AND POSSESSION              12

(13) CONDITION OF PROPERTY                                  13

(14) RIDERS, EARNEST MONEY DEPOSIT,

FINANCIAL QUALIFICATION OF BUYERS.                14

(15) Conclusion                                                                             15

 

 

 

 

 

[1]EXECUTIVE SUMMERY:

A contract is a legally enforceable agreement between two or more parties with mutual obligations. The remedy at law for breach of contract is “damages” or monetary compensation. In equity, the remedy can be specific performance of the contract or an injunction. Both remedies award the damaged party the “benefit of the bargain” or expectation damages, which are greater than mere reliance damages, as in promissory estoppe.

An agreement does not become a binding contract unless there is an intention to enter into legal relations.The parties must intend that the transaction should be attended by legal consequence and create legal obligations. The intention of the parties is to be gathered from the terms of the agreement and the surrounding circumstance. In arriving at a conclusion as to what is the interest of the parties the courts usually apply an objective and not subjective test. Any way it is unto the courts to decide whether the parties have intended to enter into legal obligation.

[2]SUMMARY OF IMPORTANT ISSUES FOR CONTRACT.

Written contracts:

  • If the contract has been formally written and signed by the parties, there is an assumption that all the terms of the agreement are contained in the written document regardless of what may have been verbally agreed.
  • When a contract is signed, it is assumed that all the terms have been read and agreed to.
  • If unsigned, a written contract must:
  • Verbal agreements rely on the good faith of all the parties and can be difficult to prove.
  • Conversely, in some situations, insisting on a detailed written agreement may be counter-productive if:

Verbal agreements:

    • The value of the transaction is not particularly high
    • The presentation of a substantial document, possibly with many provisions, may raise more questions and uncertainty in the minds of the parties than it resolves, ending in the transaction not proceeding. Specific actions of the other party,  past dealing with the other party.
[3] INTRODUCTION:

A contract is an agreement which legally binds the parties. Sometimes contracts are referred to as enforceable agreement. This is rather misleading since one party can not usually force the other to fulfill his part of the bargain. According to [4]Salmond a contract is “an agreement creating and defining obligations between the parties “According to [5]Sir William Anson, “A contract is an agreement enforceable at law made between two or more person, by which rights are acquired by one or more to acts or forbearances on the part of the others.

[6] REAL ESTATE CONTRACT:

A real estate contract is a contract for the purchase/sale, exchange, or other conveyance of real estate between parties. Real estate called leasehold estate is actually a rental of real property such as an apartment, and leases cover such rentals since they typically do not result in recordable deeds. Freehold conveyances of real estate are covered by real estate contracts, including conveying fee simple title, life estates, remainder estates, and freehold easements. Real estate contracts are typically bilateral contracts and should have the legal requirements specified by contract law in general and should also be in writing to be enforceable. Contents.

1 Details explained on the contract:

1.1 In writing

1.2 Offer and acceptance

1.3 Deed specified

1.4 Contingencies

1.5 Date of closing and possession

1.6 Condition of property

1.7 Riders

1.8 Earnest money deposit

2 Financial qualifications of buyer(s)

3 References

4 See also

 

[7] IN WRITING.

In writing In many countries, real estate contracts must be in writing to be enforceable. In the United States the Statute of Frauds require real estate contracts to be in writing to be enforceable. In South Africa, the Alienation of Land Act specifies that any agreement of sale of immovable property must be in writing.

Additionally, a real estate contract must:

Identify the parties: The full name of the parties must be on the contract. In a sales contract, the parties are the seller(s) and buyer(s) of the real estate, who are often called the principals to distinguish them from real estate agents, who are effectively their intermediaries and representatives in negotiation of the price.

Identify the real estate (property): At least the address, but preferably the legal description must be on the contract.

Identify the purchase price: The amount of the sales price or a reasonably ascertainable figure (an appraisal to be completed at a future date) must be on the contract.

Include signatures: A real estate contract must be entered into voluntarily (not by force), and must be signed by the parties, to be enforceable.

Have a legal purpose: The contract is void if it calls for illegal action.

Involve competent parties: Mentally impaired, drugged persons, etc. cannot enter into a contract. Contracts in which at least one of the parties is a minor are voidable by the minor.

Reflect a meeting of the minds: Each side must be clear and agree as to the essential details, rights, and obligations of the contract.

[8]OFFER AND ACCEPTANCE.

As may be the case with other contracts, real estate contracts may be formed by one party making an offer and another party accepting the offer. To be enforceable, the offers and acceptances must be in writing [9](Statute of Frauds, Common Law) and signed by the parties agreeing to the contract. Often, the party making the offer prepares a written real estate contract, signs it, and transmits it to the other party who would accept the offer by signing the contract. As with all other types of legal offers, the other party may accept the offer, reject it – in which case the offer is terminated, make a counteroffer – in which case the original offer is terminated, or not respond to the offer – in which case the offer terminates by the expiration date in it. Before the offer (or counteroffer) is accepted, the offering (or countering) party can withdraw it. A counteroffer may be countered with yet another offer, and a counter offering process may go on indefinitely between the parties.

To be enforceable, a real estate contract must possess original signatures by the parties and any alterations to the contract must be initialed by all the parties involved. If the original offer is marked up and initialed by the party receiving it, then signed, this is not an offer and acceptance but a counter-offer.

[10] DEED SPECIFIED.

A real estate contract typically does not convey or transfer ownership of real estate by itself. A different document called a deed is used to convey real estate. In a real estate contract, the type of deed to be used to convey the real estate may be specified, such as a warranty deed or a quitclaim deed. If a deed type is not specifically mentioned, “marketable title” may be specified, implying a warranty deed should be provided. Lenders will insist on a warranty deed. Any liens or other encumbrances on the title to the real estate should be mentioned up front in the real estate contract, so the presence of these deficiencies would not be a reason for voiding the contract at or before the closing. If the liens are not cleared before by the time of the closing, then the deed should specifically have an exception(s) listed for the lien(s) not cleared.

The buyer(s) signing the real estate contract are liable (legally responsible) for providing the promised consideration for the real estate, which is typically money in the amount of the purchase price. However, the details about the type of ownership may not be specified in the contract. Sometimes, signing buyer(s) may direct a lawyer preparing the deed separately what type of ownership to list on the deed and may decide to add a joint owner(s), such as a spouse, to the deed. For example, types of joint ownership (title) may include tenancy in common, joint tenancy with right of survivorship, or joint tenancy by the entireties. Another possibility is ownership in trust instead of direct ownership.

[11]CONTINGENCIES.

Contingencies are conditions which must be met if a contract is to be performed.Contingencies that suspend the contract until certain events occur are known as “suspensive conditions”. Contingencies that cancel the contract if certain event occur are known as “resolutive conditions”.Most contracts of sale contain contingencies of some kind or another, because few people can afford to enter into a real estate purchase without them. Some types of contingencies which can appear in a real estate contract include: Mortgage contingency – Performance of the contract (purchase of the real estate) is contingent upon or subject to the buyer getting a mortgage loan for the purchase. Usually such a contingency calls for a buyer to apply for a loan within a certain period of time after the contract is signed. Since most people who buy a house require financing to complete their purchase, mortgage contingencies are one of the most common type of contingencies in real property contracts. If the financing is not secured, the buyer may unilaterally cancel the contract by stating that his or her condition has not or will not be satisfied or allow the contract to expire by declining to waive the condition within the specified time period.

Inspection contingency – Another buyer’s condition. Purchase of the real estate is contingent upon a satisfactory inspection of the real property revealing no significant defects. Contingencies could also be made on the satisfactory repair of a certain item associated with the real estate.

Appraisal contingency – Purchase of the real estate is contingent upon the contract price being at or below a fair market value determined by an appraisal. Lenders will often not lend more than a certain percentage (fraction) of the appraised value, so such a contingency may be useful for a buyer.

[12]DATE OF CLOSING AND POSSESSION:

A typical real estate contract specifies a date by which the closing must occur. The closing is the event in which the money (or other consideration) for the real estate is paid for and title (ownership) of the real estate is conveyed from the seller(s) to the buyer(s). The conveyance is done by the seller(s) signing a deed for buyer(s) or their attorneys or other agents to record the transfer of ownership. Often other paperwork is necessary at the closing.

The date of the closing is normally also the date when possession of the real estate is transferred from the seller(s) to the buyer(s). However, the real estate contract can specify a different date when possession changes hands. Transfer of possession of a house, condominium, or building is usually accomplished by handing over the key(s) to it. The contract may have provisions in case the seller(s) hold over possession beyond the agreed date.[13] [WHAT legal proviisions can be made for the protection of buyer in ‘escrow?’–DB]

The contract can also specify which party pays for what closing cost(s). If the contract does not specify, then there are certain customary defaults depending on law, common law (judicial precedents), location, and other orders or agreements, regarding who pays for which closing costs.

[14]CONDITION OF PROPERTY:

A real estate contract may specify in what condition of the property should be when conveying the title or transferring possession. For example, the contract may say that the property is sold as is, especially if demolition is intended. Alternatively there may be a representation or a warranty (guarantee) regarding the condition of the house, building, or some part of it such as affixed appliances, HVAC system, etc. Sometimes a separate disclosure form specified by a government entity is also used. The contract could also specify any personal property (non-real property) items which are to be included with the deal, such as washer and dryer which are normally detachable from the house. Utility meters, electrical wiring systems, fuse or circuit breaker boxes, plumbing, furnaces, water heaters, sinks, toilets, bathtubs, and most central air conditioning systems are normally considered to be attached to a house or building and would normally be included with the real property by default.

[15] RID          ERS. Riders (or addenda) are special attachments (separate sheets) that become part of the contract in certain situations.

[16]EARNEST MONEY DEPOSIT:

Although, it is not absolutely required for a valid real estate offer or a contract, an earnest money deposit from the buyer(s) customarily accompanies an offer to buy real estate. The amount, a small fraction of the total price, is listed in the contract, with the remainder of the cost to be paid at the closing.

FINANCIAL QUALIFICATION OF BUYERS:

The better the financial qualification of the buyer(s) is, the more likely the closing will be successfully completed, which is typically the goal of the seller. Any documentation demonstrating financial qualifications of the buyer(s), such as mortgage loan pre-approval or pre-qualification, may accompany a real estate offer to buy along with an earnest money check. When there are competing offers or when a lower offer is presented, the seller may be more likely to accept an offer from a buyer demonstrating evidence of being well qualified than from a buyer without such evidence.

[17] Conclusion:

The contract shall be regarded as concluded, if an agreement has been achieved between the parties on all its essential terms, in the form proper for the similar kind of contracts. As essential shall be recognized the terms, dealing with the object of the contract, the terms, defined as essential or indispensable for the given kind of contracts in the law or in the other legal acts, and also all the terms, about which, by the statement of one of the parties, an accord shall be reached. The contract shall be concluded by way of forwarding the offer of the parties and of its acceptance by the other party.The contract shall be recognized as concluded at the moment, when the person, who has forwarded the offer, has obtained its acceptance. If in conformity with the law, the transfer of the property is also required for the conclusion of the contract, it shall be regarded as concluded from the moment of the transfer of the corresponding property.

BIBLIOGRAPHY

1)      http://en.wikipedia.org/wiki/Contract

2)      http://www.banglapedia.org/httpdocs/HT/C_0344.HTM

3)      http://definitions.uslegal.com/m/minimum-contacts/

4)      http://en.wikipedia.org/wiki/Real_estate_contract

5)      http://www.innovation.gov.au/SMALLBUSINESS/WORKINGWITHCONTRACTS/Pages/ContractTypes.aspx

Books

  • . Galaty (Author), Wellington J Allaway (Author), Robert C. Kyle (Author
  • Business Law: The Ethical, Global James Karp (Author), Elliot Klayman (Author)
  • Fillmore W, and E-Commerce Environment [Book] by Jane Mallor, A. James Barnes, L.     Thomas Bowers, Arlen Langvardt in Books

[1] EXECUTIVE SUMMERY.

[2] SUMMARY OF IMPORTANT ISSUES FOR CONTRACT

[3] INTRODUCTION

[4] Salmond

[5] Sir William

[6] REAL ESTATE CONTRACT

[7] IN WRITING

[8] OFFER AND ACCEPTANCE

[9] (Statute of Frauds, Common Law)

[10] DEED SPECIFIED.

[11] CONTINGENCIES.

[12] DATE OF CLOSING AND POSSESSION

[13] [WHAT legal proviisions can be made for the protection of buyer in ‘escrow?’–DB]

[14] CONDITION OF PROPERTY

[15] RIDERS

[16] EARNEST MONEY DEPOSIT

[17] Conclusion

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