BREACH OF CONTRACT
Real estate contracts are subject to the general law of contracts. An understanding of the law of contracts is central to an understanding of real estate transactions. The various rules relating to listing agreements, deposit receipts, buy/sell agreements, options, escrow instructions, brokers’ commissions, and the like are not a separate and distinct branch of law unrelated to the general body of contract law; these rules are merely a specialized part of it. In addition, the basic legal rules of real estate marketing are rules of contract and must he studied within that framework.
A real estate contract, like any other contract, is a binding agreement to do or not to do a certain thing. It is more than a mere exchange of promises or acts. It is an exchange of promises or acts that creates a legal duty or obligation that the law will enforce.
A real estate contract may be defined based on the intent of parties. A real estate contract is either unilateral or bilateral contract. A contract may also be express or implied. A quasi-contract is a contract that the parties did not consent to it. A party, however, may enforce the obligation against other party if the other party received benefit from the first party.
Creation of Contract. A valid contract requires mutual asset of both parties, must contain consideration, the parties must have legal capacity to enter into contract, and the subject of contract must be lawful.
Void & Voidable Contract. A contract may be void for many reasons. For example, a contract by a minor for sale of real property is a void contract. A contract may also be voidable by the option of one of the parties to the contract. A voidable contract could be voided if the affected party exercise his or her option to void the contract.
Statute of Frauds. California Civil Code Section 1624 requires certain real estate contracts to be in writing to be enforceable. There are, however, many exceptions to the requirements of statute of frauds. The major exceptions are the executed oral agreement, estoppel to assert statute of frauds, actual fraud by one party against the other party, and damages caused by one party against the other party.
Modification and Termination of Contract. A contract may be altered, modified, or terminated by the mutual consent of all parties. Except for certain acts of parties, modification and termination of contract follows the same rules of creation of contract.
Vitiating Mutual Consent. A contract may be declared void if one party or both parties did not consent to the contract. The consent is not made by a party if the contract is made by mistake, by fraud or deceit, by duress, or by undue influence.
Breach of Contract. Contracts mostly contain covenants, conditions precedent, and conditions concurrent. Most breaches in contracts occur as the result of failure of one party to perform the covenants of the contract. That is, a party should have done something that is required under the terms of contract, and fails to perform.
Failure to perform a duty under the contract does not automatically results in breach of the contract. Rather, the party claiming damages must show that he or she has performs his or her obligations under the contract, or has been prevented to perform his or her obligations by the non-performing party.
Non-performance of a duty must be a material obligation of the non-performing party. As such, not all non-performance by one party is a breach of contract.
A party that has been damaged as the result of non-performance by the second party has the option of filing a complaint for damages for tort. The party may also file for non-remedies under a contract.
Seeking damages for breach of c contract under tort theory falls under the negligence theory of law. As such, a party must show that the non-performing party caused him or her damages as the result of negligence.
A party may seek rescission of contract for breach of contract. The rescission is also available for formation of contract due to mistake, fraud or deceit, duress, undue influence, material failure of consideration, when the contract is illegal, or there is breach of warranty.
A party may also seek specific performance of contact. Under laws of specific circumstance, a court will order a party to render the performance required by the contract. California Civil Code Sections 3384 & 3395 specify the requirements for the specific performance of contract upon breach by a party to the contract. The most common action filed for specific performance in real estate contract is by a buyer of real property when the seller changes his or her mind after signing the purchase contract, and refuses to close the escrow.
A party damaged as the result of breach of contract may seek for compensatory damages, consequential damages, loss of profits, punitive damages, attorneys’ fees, costs, and interest on the loss profits.
For more information call us at (310)553-5562.
Real estate contracts are subject to the general law of contracts. An understanding of the law of contracts is central to an understanding of real estate transactions. The various rules relating to listing agreements, deposit receipts, buy/sell agreements, options, escrow instructions, brokers’ commissions, and the like are not a separate and distinct branch of law unrelated to the general body of contract law; these rules are merely a specialized part of it. In addition, the basic legal rules of real estate marketing are rules of contract and must he studied within that framework.
A real estate contract, like any other contract, is a binding agreement to do or not to do a certain thing. It is more than a mere exchange of promises or acts. It is an exchange of promises or acts that creates a legal duty or obligation that the law will enforce.
A real estate contract may be defined based on the intent of parties. A real estate contract is either unilateral or bilateral contract. A contract may also be express or implied. A quasi-contract is a contract that the parties did not consent to it. A party, however, may enforce the obligation against other party if the other party received benefit from the first party.
Creation of Contract. A valid contract requires mutual asset of both parties, must contain consideration, the parties must have legal capacity to enter into contract, and the subject of contract must be lawful.
Void & Voidable Contract. A contract may be void for many reasons. For example, a contract by a minor for sale of real property is a void contract. A contract may also be voidable by the option of one of the parties to the contract. A voidable contract could be voided if the affected party exercise his or her option to void the contract.
Statute of Frauds. California Civil Code Section 1624 requires certain real estate contracts to be in writing to be enforceable. There are, however, many exceptions to the requirements of statute of frauds. The major exceptions are the executed oral agreement, estoppel to assert statute of frauds, actual fraud by one party against the other party, and damages caused by one party against the other party.
Modification and Termination of Contract. A contract may be altered, modified, or terminated by the mutual consent of all parties. Except for certain acts of parties, modification and termination of contract follows the same rules of creation of contract.
Vitiating Mutual Consent. A contract may be declared void if one party or both parties did not consent to the contract. The consent is not made by a party if the contract is made by mistake, by fraud or deceit, by duress, or by undue influence.
Breach of Contract. Contracts mostly contain covenants, conditions precedent, and conditions concurrent. Most breaches in contracts occur as the result of failure of one party to perform the covenants of the contract. That is, a party should have done something that is required under the terms of contract, and fails to perform.
Failure to perform a duty under the contract does not automatically results in breach of the contract. Rather, the party claiming damages must show that he or she has performs his or her obligations under the contract, or has been prevented to perform his or her obligations by the non-performing party.
Non-performance of a duty must be a material obligation of the non-performing party. As such, not all non-performance by one party is a breach of contract.
A party that has been damaged as the result of non-performance by the second party has the option of filing a complaint for damages for tort. The party may also file for non-remedies under a contract.
Seeking damages for breach of c contract under tort theory falls under the negligence theory of law. As such, a party must show that the non-performing party caused him or her damages as the result of negligence.
A party may seek rescission of contract for breach of contract. The rescission is also available for formation of contract due to mistake, fraud or deceit, duress, undue influence, material failure of consideration, when the contract is illegal, or there is breach of warranty.
A party may also seek specific performance of contact. Under laws of specific circumstance, a court will order a party to render the performance required by the contract. California Civil Code Sections 3384 & 3395 specify the requirements for the specific performance of contract upon breach by a party to the contract. The most common action filed for specific performance in real estate contract is by a buyer of real property when the seller changes his or her mind after signing the purchase contract, and refuses to close the escrow.
A party damaged as the result of breach of contract may seek for compensatory damages, consequential damages, loss of profits, punitive damages, attorneys’ fees, costs, and interest on the loss profits.
For more information call us at (310)553-5562.
