In your career as a real estate agent, you will see many contracts coming and going. Remember that every contract has a lifespan and goes from training to landfill. Some contracts live a long and happy life and retire after a full performance, satisfied with the memories of a life well lived. Others crash and burn because they are poorly trained from the start and are doomed to have no legal effect. I hope that what you have learned in this chapter will help you understand the lifespan of each contract you encounter. As a general rule, a minor cannot conclude an enforceable contract. A contract concluded by a minor may be terminated by the minor or his guardian. After reaching the age of majority (18 in most states), a person still has a reasonable period of time to terminate a contract entered into as a minor. If the contract is not terminated within a reasonable period of time (which is determined by state law), it is considered ratified, making it binding and enforceable. If there is a valid defense against a contract, it can be appealed, which means that the party who has been the victim of injustice can terminate or revoke the contract. In some cases, the injustice is so extreme that the contract is considered void, in other words, a court will conclude that no contract has ever been concluded. What are some of the reasons why a court might refuse to perform a contract? A void contract is a formal agreement that is effectively illegitimate and unenforceable from the moment it is created.
A void contract is different from a voidable contract because, although a void contract has never been legally valid from the beginning (and will not be enforceable at a later date), voidable contracts can be legally enforceable once the underlying contractual defects have been corrected. At the same time, invalid contracts and countervailable contracts may be cancelled for similar reasons. Let`s start with the first case – an agreement that is void if it is concluded. A contract is usually invalid because it lacks an essential element. For example, a contract may be invalid because it has an illegal purpose. A common example is an agreement between a supplier and a dealer on the supply of illicit drugs. The supplier and the dealer may have negotiated at length to reach an agreement that benefited them. You may even have established an exquisite delivery schedule and thought of all sorts of contingencies to compensate each other in case of a problem. But for reasons of law and order, the courts will simply not enforce the illegal drug supply agreement, no matter how well negotiated it has been. The agreement is considered void at the time it was created because it was created for an illegal purpose. Do you remember our hitman from the last lesson? His contract also failed because it was intended to serve an illegal purpose. If a contract does not provide for a fixed time limit for performance, courts generally say that the parties must act within a “reasonable time”.
This rule is a natural consequence of the duty to act in good faith, which we discussed a few lessons ago. What constitutes a “reasonable period of time” depends on the nature of the contract and the circumstances of the case. A truck driver carrying perishable fruit has to work faster than a contractor who builds a skyscraper. In the next lesson, we will talk about what happens after the parties enter into a valid contract and begin to fulfill their obligations. So far, we have talked about offer and acceptance, consideration and legal capacity. In addition to these essential elements, a contract must also have a legal purpose. The courts will not enforce a contract that aims to achieve something illegal. Nor will they enforce a contract that violates public order. Finally, a party may take legal action in response to the other party`s violation. This action may result in a final court order awarding damages and exonerating the contract.
After such a discharge, the contract no longer has legal effect. Courts often classify real estate in this category as well. For example, if Ernesto was reluctant to the closing table because he had decided that Maya was right about the future of the Vista with the nearby Film Museum, it is likely that a court would order Ernesto to make the sale. The Vista – its architecture and location – is a unique building, and by arranging a particular representation, the court can ensure that Maya benefits from its market in a way that simple damages would not provide. In addition to consideration, offer and acceptance, a contract must also involve parties with the legal capacity to enter into a contract. Sometimes we call this idea legal competence. A party has the legal capacity to enter into a contract if it can understand the legal consequences of what it does. Then the parties must keep their promises for each other. They must do what they said and fulfill their respective obligations under the contract.
What exactly should the parties do? You have to do what the treaty says and only what the contract says. Neither party has to do more than they have agreed, and once they have done so, their obligation under the contract ends. No one, not even a court, can force them to do more. When both parties are fully fulfilled, the contract is concluded. It becomes an executed contract and it ends. The duty of good faith and fair dealing is intuitive. Tanya expects Terry to seek funding in good faith, and Terry expects Tanya to replace the stove. If you were in their shoes, weren`t you? Of course, if one person doesn`t even try to fulfill their end agreement, we think the other party has behaved badly. The courts are of the same opinion. On request, the courts may rule for a party acting in good faith and rule against a party acting in bad faith.
An unenforceable contract is any unenforceable agreement or contract. We have already mentioned some unenforceable contracts in this lesson. Many of them, such as questionable contracts, are valid contracts that one of the parties renders unenforceable by exercising an option. Others, such as the case of the delivery of illicit drugs, may contain all the essential elements of a contract, but are not enforceable by law. Another example of an otherwise valid contract that is not legally enforceable would be an oral agreement on the sale of real estate. The parties may have agreed on all the details – price, conditions, closing date – and yet the contract would not be enforceable because it was not written and therefore violates the law on fraud. For our purposes, we will divide the contractual elements into four parts: (1) offer and acceptance, (2) consideration, (3) legal capacity and (4) legal purpose. If these phrases sound intimidating, don`t be afraid. These are just legal terms for simple, everyday concepts.
I`m sure you`ll find them familiar when we talk about them because most of these ideas come from common sense and shared experience. Why should you be interested in contracts as a real estate agent? Isn`t that the lawyer`s job? Yes and no. As a real estate agent, you will often process contracts and want to make sure that every transaction you work on is done smoothly. Understanding what makes a contract valid and enforceable, and understanding how the contract negotiation process works, can help you clear up confusion between the parties, which could potentially become an “obstacle” that sometimes even stops selling in its tracks. .