Contracts

Question 1

Doctrine of Laches

Answer 1

you lose your rights if you fail to assert them within a reasonable timeframe, and can also be used to render a contract unenforceable.

Question 2

doctrine of privity

Answer 2

The right to sue under a contract

Question 3

In the event of a breach of contract, the innocent party may demand

Answer 3

Recission – A cancellation of the contract.

Specific Performance – A court order forcing the party in violation of the contract to comply with its terms (commonly used if a seller attempts to back out of a sale). It is a type of injunctive relief (a court ordered act, or a court ordered cessation of an act).

Damages – Monetary compensation for the harm suffered as a result of the breach of contract.

Liquidated Damages – A pre-agreed amount of money paid in the event of a breach of contract.

Forfeiture – A type of liquidated damages; the loss of a deposit made during the creation of the contract (usually the buyer’s earnest money or escrow deposit in a real estate transaction).

Question 4

common contract clauses

Answer 4

Ironclad Merger Clause (Integration Clause, Merger Clause, Entire Agreement Clause) – States that any other agreements outside of the written contract (e.g. verbal statements at closing) shall not have any force or effect, and that there is no prior agreement in place.

Severability Clause – States that if a portion of the contract is voided, the rest of the contract shall remain in effect.

Contingency Clause – Makes the agreement contingent (reliant) on something occurring.

Question 5

The basic essentials of valid purchase and sales include

Answer 5

• The names of the buyers and sellers
• Legal description of realty (i.e. its address)
• Offer and acceptance (in writing per the Statute of Frauds)
• Consideration (often a 5% deposit for the buyer)
• The terms and conditions agreed on by the parties
• Any contingencies negotiated by the buyer or seller
• The date of performance (closing)

Question 6

right of first refusal

Answer 6

gives a prospective buyer the right to match any offers made on a property, and to purchase the property at the offered price in lieu of the original offeror. That said, the right doesn’t give the buyer control over what price or terms the property sells for; they are limited to matching the best offer made on the property. Unlike options, rights of first refusal allow the owner to track the market and ensure fair market value, and to choose not to sell.

Question 7

power of attorney

Answer 7

is a written document that allows someone to act in a legally binding way on behalf someone else. It creates what is known as an attorney-in-fact, and is often used to allow a real estate agent to attend a closing and sign documents on behalf of their client.