There are two common types of contracts involved in real estate; the agency contract (listing contract or exclusive buyer’s agency contract) and the contract of purchase and sale. If you are the seller and you engage the services of a REALTOR® you will enter into a listing contract with the representative of choice. For real estate transactions, the contract of purchase and sale is used. The term ‘contract’ itself means a promise or promises made from one person to another.
To be a legal and enforceable contract, there are 7 essentials:
- Offer: a promise made by one person by another
- Acceptance: acceptance made in clear positive terms to the offeror
- Consideration: Loosely speaking, consideration means that the party trying to enforce the contract must have ‘paid’ something in return for the promise. The consideration must be of some value in the eyes of the court, but it does not have to be money. The exchange of mutual promises will provide consideration for the formation of a contract
- Legal Intention: a person must have legally intended to enter into an agreement or contract.
- Capacity: The most common types of incapacity are infancy, insanity, drunkenness and the lack of a capacity of a corporation
- Legal object: Contracts made for certain purposes may be considered illegal, and thus completely void. For example, a contract to commit a crime.
- Genuine consent: means that both parties have a clear understanding of the substance of the contract. For example, if one party purposely misrepresented the object in the contract, then genuine consent would not exist.
All seven of the above essentials must be present to form a legal, enforceable contract. Believe it or not, the contract can be communicated orally, by letter or by a lengthy written document.
For any real estate assistance in the Oakville, Burlington, Milton area contact Mary at firstname.lastname@example.org