class 10 contracts.ppt

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class 10 contracts.ppt

  1. 1. INTRODUCTION TO COMMMERCIAL REAL ESTATE MANAGEMENT 490 October 28, 2009
  2. 2. Next Two Classes: Contracts <ul><li>General Contract Law Principles </li></ul><ul><li>Commercial Real Estate Contracts </li></ul><ul><ul><li>RANM Form ______ Vacant Land Sale and Purchase Agreement </li></ul></ul>
  3. 3. What is a Contract? <ul><li>Legally enforceable agreement to do (or not do something) </li></ul><ul><li>Express Contract </li></ul><ul><li>Implied Contract </li></ul><ul><li>Bilateral Contract </li></ul><ul><li>Unilateral Contract </li></ul>
  4. 4. Legal Effect of Contracts <ul><li>Enforceable </li></ul><ul><li>Void </li></ul><ul><ul><li>Never went into effect </li></ul></ul><ul><li>Voidable </li></ul><ul><ul><li>Obligations can be avoided by a party </li></ul></ul><ul><li>Unenforceable </li></ul><ul><ul><li>Once enforceable, but no longer enforceable </li></ul></ul>
  5. 5. Essentials of a Valid Contract <ul><li>Competent Parties </li></ul><ul><ul><li>Minors </li></ul></ul><ul><ul><li>Incapacitated Persons </li></ul></ul><ul><ul><li>Duress </li></ul></ul><ul><ul><li>Power of Attorney </li></ul></ul><ul><ul><li>Entities </li></ul></ul><ul><ul><ul><li>Corporations </li></ul></ul></ul><ul><ul><ul><li>Limited liability companies </li></ul></ul></ul><ul><ul><ul><li>Trusts </li></ul></ul></ul>
  6. 6. Essentials of a Valid Contract <ul><li>Mutual Agreement/Meeting of the minds </li></ul><ul><ul><li>Complete agreement on all essential terms </li></ul></ul><ul><li>Offer and Acceptance </li></ul><ul><ul><li>Accept </li></ul></ul><ul><ul><li>Reject </li></ul></ul><ul><li>Counteroffer </li></ul><ul><ul><li>Acts like a new offer that can be accepted or rejected </li></ul></ul>
  7. 7. Essentials of a Valid Contract <ul><li>Lawful Objective </li></ul><ul><ul><li>Unlawful </li></ul></ul><ul><ul><li>Against public policy </li></ul></ul><ul><li>Consideration </li></ul><ul><ul><li>Legal consideration </li></ul></ul><ul><ul><li>Exchange of promises </li></ul></ul><ul><ul><li>Adequacy of consideration </li></ul></ul>
  8. 8. Essentials of a Valid Contract <ul><li>Contract must be in writing </li></ul><ul><ul><li>Statute of Frauds </li></ul></ul><ul><ul><li>New Mexico Statute of Frauds </li></ul></ul><ul><ul><li>Why should contracts be in writing? </li></ul></ul><ul><ul><li>Parole evidence rule </li></ul></ul><ul><ul><ul><li>New Mexico rule-almost anything can be ambiguous </li></ul></ul></ul>
  9. 9. When a Contract May not be Valid <ul><li>Fraud </li></ul><ul><ul><li>Intention to deceive </li></ul></ul><ul><li>Misrepresentation </li></ul><ul><ul><li>Reckless </li></ul></ul><ul><ul><li>Negligent </li></ul></ul><ul><li>Mutual mistake </li></ul><ul><ul><li>Mutual mistake of fact (not law) </li></ul></ul><ul><li>Lack of Capacity </li></ul>
  10. 10. Performance of Contracts <ul><li>Performance/Discharge of Contracts </li></ul><ul><li>Assignment of Contracts </li></ul><ul><ul><li>“personal” contracts not assignable </li></ul></ul><ul><li>Novation </li></ul><ul><ul><li>Substitution of a new contract </li></ul></ul><ul><li>Inability to Perform </li></ul><ul><ul><li>Deceased person </li></ul></ul><ul><ul><li>Corporate existence ceases </li></ul></ul>
  11. 11. Breach of Contract <ul><li>Failure to perform vs. default </li></ul><ul><ul><li>Notice and cure periods </li></ul></ul><ul><ul><li>Usually governed by terms of contract </li></ul></ul><ul><ul><li>If not, law will determine when default occurs </li></ul></ul><ul><ul><li>No remedy until there is a “default” </li></ul></ul>
  12. 12. Remedies for Default <ul><li>Partial Performance </li></ul><ul><li>Unilateral Rescission </li></ul><ul><li>Money Damages </li></ul><ul><ul><li>Incidental damages </li></ul></ul><ul><ul><li>Consequential damages </li></ul></ul><ul><ul><li>Attorneys’ fees and costs </li></ul></ul><ul><li>Liquidated Damages </li></ul><ul><li>Specific Performance </li></ul><ul><li>Mutual Rescission </li></ul>
  13. 13. Defenses against Enforcement <ul><li>Statute of Limitations </li></ul><ul><ul><li>Purpose </li></ul></ul><ul><ul><li>New Mexico: suit must be brought within six years for an action based on breach of a written contract </li></ul></ul><ul><ul><li>New Mexico: four years for fraud or negligence claims </li></ul></ul>

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