Principles of California
Real Estate
Lesson 6:
Contract Law
Introduction
Contract: An agreement between two or
more persons to do, or not do, certain things.
Introduction
Contract: An agreement between two or
more persons to do, or not do, certain things.
Valid contract: A legally binding contract.
Introduction
Contract: An agreement between two or
more persons to do, or not do, certain things.
Valid contract: A legally binding contract.
 Valid contract will be enforced by a
court if one party fails to comply with
agreement.
Legal Classifications of Contracts
 Contracts may be classified according to
certain basic characteristics.
Legal Classifications of Contracts
 Contracts may be classified according to
certain basic characteristics.
 Every contract is:
 express or implied
 unilateral or bilateral
 executory or executed
Legal Classifications of Contracts
Express vs. implied
Express contract: One that is put into
words, oral or written.
Legal Classifications of Contracts
Express vs. implied
Express contract: One that is put into
words, oral or written.
Implied contract: One not expressed in
words, but implied by the parties’ actions.
Legal Classifications of Contracts
Express vs. implied
Express contract: One that is put into
words, oral or written.
Implied contract: One not expressed in
words, but implied by the parties’ actions.
Most contracts are express,
not implied.
Legal Classifications of Contracts
Unilateral vs. bilateral
Unilateral contract: Only one party promises
to do something and is legally obligated to
perform as promised.
Reward for Lost Dog!
I promise to pay$$- you promise nothing-
Legal Classifications of Contracts
Unilateral vs. bilateral
Unilateral contract: Only one party promises
to do something and is legally obligated to
perform as promised.
Bilateral contract: Both parties promise to
do something and are legally obligated to
perform as promised.
Legal Classifications of Contracts
Unilateral vs. bilateral
Unilateral contract: Only one party promises
to do something and is legally obligated to
perform as promised.
Bilateral contract: Both parties promise to
do something and are legally obligated to
perform as promised.
Most contracts are bilateral.
Legal Classifications of Contracts
Executory vs. executed
Executory: Contract is in the process of
being performed.
Listing for three months to sell propertyUp until sale of the property it is “in process”
Legal Classifications of Contracts
Executory vs. executed
Executory: Contract is in the process of
being performed.
Executed: Contract has been fully performed;
both parties have fulfilled their promises.
The House sold, and you paid me the
commission-
Legal Classifications of Contracts
Executory vs. executed
Executory: Contract is in the process of
being performed.
Executed: Contract has been fully performed;
both parties have fulfilled their promises.
 Note that “executed” may also refer to a
contract that has been signed.
Summary
Legal Classifications of Contracts
 Contract
 Express or implied
 Unilateral or bilateral
 Executory or executed
Elements of a Valid Contract
A valid contract must have:
 Capacity
 Consideration
 lawful objective
 mutual consent
CCLM- say calm
Elements of a Valid Contract
Contractual capacity
 Contract is not legally binding unless all
parties have legal capacity to enter into it.
Elements of a Valid Contract
Contractual capacity
 Contract is not legally binding unless all
parties have legal capacity to enter into it.
 Two requirements for legal capacity:
(1) age
(2) mental competence
Contractual Capacity
Age of majority
 In California, a person must be at least 18
to enter into a contract.
 18 is the age of majority.
 Someone under 18 is a minor.
Contractual Capacity
Age of majority
 In California, a person must be at least 18
to enter into a contract.
 18 is the age of majority.
 Someone under 18 is a minor.
 Parent or legal guardian may enter into a
binding contract on minor’s behalf.
Contractual Capacity
Age of majority
 Real estate contract in which one party is
a minor is void.
Contractual Capacity
Age of majority
 Real estate contract in which one party is
a minor is void.
 No legal effect. Neither party can enforce it
against the other.
Contractual Capacity
Age of majority
 Real estate contract in which one party is
a minor is void.
 No legal effect. Neither party can enforce it
against the other.
 Other contracts (not related to real estate)
signed by a minor are voidable by the minor.
Contractual Capacity
Age of majority
 Real estate contract in which one party is
a minor is void.
 No legal effect. Neither party can enforce it
against the other.
 Other contracts (not related to real estate)
signed by a minor are voidable by the minor.
 Other party can’t enforce contract.
 Minor can enforce contract through parent
or guardian if he or she wants to.
Contractual Capacity
Age of majority
 Exception: Emancipated minor may freely
enter into any type of contract.
Contractual Capacity
Age of majority
 Exception: Emancipated minor may freely
enter into any type of contract.
 Minor may be emancipated by:
 marriage
 military service
 court order
Contractual Capacity
Mental competence
 Mentally competent: Of sound mind.
Contractual Capacity
Mental competence
 Mentally competent: Of sound mind.
 If one party has been declared mentally
incompetent, contract is void.
 Legal guardian can enter into contracts on
behalf of incompetent person.
Contractual Capacity
Mental competence
 Mentally competent: Of sound mind.
 If one party has been declared mentally
incompetent, contract is void.
 Legal guardian can enter into contracts on
behalf of incompetent person.
 If someone enters into a contract while
temporarily incompetent, contract may be
voidable.
Summary
Contractual Capacity
 Capacity
 Age of majority
 Mental competence
 Guardian
Elements of a Valid Contract
Consideration
 Consideration: Each party to a contract must
give the other something of value, which is
called consideration.
Elements of a Valid Contract
Consideration
 Consideration: Each party to a contract must
give the other something of value, which is
called consideration.
 Money, property, services, or a promise to
provide something of value in the future.
 Love and affection- gift to family member
Elements of a Valid Contract
Consideration
 Consideration: Each party to a contract must
give the other something of value, which is
called consideration.
 Money, property, services, or a promise to
provide something of value in the future.
 Consideration in typical real estate sale:
 seller’s promise to convey title
 buyer’s promise to pay agreed price
Elements of a Valid Contract
Lawful objective
 If one party agrees to commit an unlawful
act, a court won’t enforce contract on
behalf of either party.
 Rule applies to any contract involving a
violation of law or public policy.
Elements of a Valid Contract
Mutual consent
 Contract is legally binding only if both parties
have consented to its terms.
Elements of a Valid Contract
Mutual consent
 Contract is legally binding only if both parties
have consented to its terms.
 Mutual consent arrived at through
offer and acceptance:
Elements of a Valid Contract
Mutual consent
 Contract is legally binding only if both parties
have consented to its terms.
 Mutual consent arrived at through
offer and acceptance:
 Offeror makes offer to offeree.
 If offeree accepts offer, contract is formed.
Mutual Consent
Offer and acceptance
Offer must :
 express an intention to enter into a contract
 be definite and certain
Mutual Consent
Offer and acceptance
Offer must :
 express an intention to enter into a contract
 be definite and certain
To be “definite and certain,” offer must specify
basic contract terms.
Mutual Consent
Offer and acceptance
Offer must :
 express an intention to enter into a contract
 be definite and certain
To be “definite and certain,” offer must specify
basic contract terms.
 Vague offer is illusory.
 If accepted, contract is unenforceable.
Offer and Acceptance
Termination of an offer
 Offer terminates if before acceptance:
 offeror revokes offer
 too much time passes
 offeror dies or is declared insane
 offeree rejects offer
 offeree makes counteroffer
Offer and Acceptance
Termination of an offer
 Offer terminates if before acceptance:
 offeror revokes offer
 too much time passes
 offeror dies or is declared insane
 offeree rejects offer
 offeree makes counteroffer
 If offer terminates before it is accepted, no
contract is formed.
Termination of an Offer
Revocation
 Offeror can revoke offer any time before
acceptance.
 Offeror must notify offeree of revocation
before acceptance.
Termination of an Offer
Revocation
 Offeror can revoke offer any time before
acceptance.
 Offeror must notify offeree of revocation
before acceptance.
 Even if offer was supposed to remain open
until a particular date, offeror can revoke it
before that date arrives.
Termination of an Offer
Lapse of time
 Offer that states deadline for acceptance
expires automatically when that date or
time arrives.
Termination of an Offer
Lapse of time
 Offer that states deadline for acceptance
expires automatically when that date or
time arrives.
 Offer without deadline expires after a
reasonable amount of time has passed.
Termination of an Offer
Lapse of time
 Offer that states deadline for acceptance
expires automatically when that date or
time arrives.
 Offer without deadline expires after a
reasonable amount of time has passed.
 “Reasonable” depends on circumstances.
 Issue sometimes decided by court.
Termination of an Offer
Death or insanity
 If offeror dies before offer is accepted, offer
is terminated and no contract is formed.
Termination of an Offer
Death or insanity
 If offeror dies before offer is accepted, offer
is terminated and no contract is formed.
 If a court determines offeror is mentally
incompetent, offer is terminated.
Termination of an Offer
Rejection by offeree
 Rejection terminates offer.
 After rejecting offer, offeree can’t simply
change mind and accept it.
Termination of an Offer
Rejection by offeree
 Rejection terminates offer.
 After rejecting offer, offeree can’t simply
change mind and accept it.
 Contract will be formed only if offeror still
wants to proceed.
Termination of an Offer
Counteroffer
Counteroffer: When offeree agrees to some
terms of original offer, but changes one or
more other terms.
Termination of an Offer
Counteroffer
Counteroffer: When offeree agrees to some
terms of original offer, but changes one or
more other terms.
 Although sometimes called a qualified
acceptance, a counteroffer has the legal
effect of a rejection.
Termination of an Offer
Counteroffer
Counteroffer: When offeree agrees to some
terms of original offer, but changes one or
more other terms.
 Although sometimes called a qualified
acceptance, a counteroffer has the legal
effect of a rejection.
 Counteroffer terminates original offer and
replaces it with new offer.
Offer and Acceptance
Communication of acceptance
 To create binding contract, offeree must
communicate acceptance to offeror before
offer terminates.
Offer and Acceptance
Communication of acceptance
 To create binding contract, offeree must
communicate acceptance to offeror before
offer terminates.
 Offer may specify how acceptance must
be communicated.
Offer and Acceptance
Communication of acceptance
 To create binding contract, offeree must
communicate acceptance to offeror before
offer terminates.
 Offer may specify how acceptance must
be communicated.
 If no time or manner of acceptance is
stated in offer, a reasonable time and
manner is implied.
Negative Forces Affecting
Consent
 Acceptance must be freely given.
Negative Forces Affecting
Consent
 Acceptance must be freely given.
 Contract voidable by victimized party if he
or she can show consent resulted from:
 fraud
 undue influence
 duress
Negative Forces Affecting
Consent
Fraud
 Fraud: Misrepresenting a material fact to
someone who relies on the misinformation.
Negative Forces Affecting
Consent
Fraud
 Fraud: Misrepresenting a material fact to
someone who relies on the misinformation.
 Material fact: Important information that
could affect offeree’s decision to enter
into contract.
Negative Forces Affecting
Consent
Fraud
 Fraud: Misrepresenting a material fact to
someone who relies on the misinformation.
 Material fact: Important information that
could affect offeree’s decision to enter
into contract.
 Fraud is either actual or constructive.
Negative Forces Affecting
Consent
Fraud
 Actual fraud: Person making
misrepresentation knows or should know
that it’s false.
Negative Forces Affecting
Consent
Fraud
 Actual fraud: Person making
misrepresentation knows or should know
that it’s false.
 Intentional deceit.
 Statements made without knowing
whether they’re true.
Negative Forces Affecting
Consent
Fraud
 Actual fraud: Person making
misrepresentation knows or should know
that it’s false.
 Intentional deceit.
 Statements made without knowing
whether they’re true.
 Constructive fraud: Person in a position
of trust or with superior knowledge
unintentionally misleads other person.
Negative Forces Affecting
Consent
Fraud
 It isn’t necessary to actually make misleading
statements to commit fraud.
Negative Forces Affecting
Consent
Fraud
 It isn’t necessary to actually make misleading
statements to commit fraud.
 Simply concealing a material fact may
be fraud.
 Concealment of a material fact is
sometimes called negative fraud.
Negative Forces Affecting Consent
Undue influence
 Undue influence: Persuading someone to
sign contract by taking advantage of trust,
weakness of mind, or distress.
Negative Forces Affecting Consent
Undue influence
 Undue influence: Persuading someone to
sign contract by taking advantage of trust,
weakness of mind, or distress.
 Persuasion strong enough to overpower
will, so that consent isn’t truly voluntary.
Negative Forces Affecting Consent
Undue influence
 Undue influence: Persuading someone to
sign contract by taking advantage of trust,
weakness of mind, or distress.
 Persuasion strong enough to overpower
will, so that consent isn’t truly voluntary.
 May involve abuse of special legal
relationship based on trust: broker-seller,
attorney-client, etc.
Negative Forces Affecting Consent
Duress
 Duress: One party uses physical
confinement, violence, or threat of
confinement or violence to force other
party to sign.
Negative Forces Affecting Consent
Law presumes consent
 Other party can enforce contract unless it
can be proved in court that fraud, undue
influence, or duress was involved.
Negative Forces Affecting Consent
Law presumes consent
 Someone who signs contract without
reading it is not excused from performance.
 Party who can’t read should always ask
someone he trusts to read it for him.
Negative Forces Affecting Consent
Law presumes consent
 Someone who signs contract without
reading it is not excused from performance.
 Party who can’t read should always ask
someone he trusts to read it for him.
 Party who doesn’t know language
should always ask someone she trusts
to translate.
Elements of a Valid Contract
Statute of frauds
 The statute of frauds is a state law that
requires some types of contracts to be:
 in writing, and
 signed.
Statute of Frauds
Which contracts must be in writing
California’s statute of frauds applies to any
agreement:
1. that is not to be performed within one year
Statute of Frauds
Which contracts must be in writing
California’s statute of frauds applies to any
agreement:
1. that is not to be performed within one year
2. for sale or exchange of real estate
(e.g., purchase and sale agreement)
Statute of Frauds
Which contracts must be in writing
California’s statute of frauds applies to any
agreement:
1. that is not to be performed within one year
2. for sale or exchange of real estate
(e.g., purchase and sale agreement)
3. For leasing real estate, if it will expire
more than one year after it is entered into
(e.g., 13-month lease)
Statute of Frauds
Which contracts must be in writing
4. authorizing agent to purchase or sell real
estate (power of attorney)
Statute of Frauds
Which contracts must be in writing
4. authorizing agent to purchase or sell real
estate (power of attorney)
5. authorizing agent to find buyer or seller
for real estate, if agent will receive
compensation (listing agreement)
Statute of Frauds
Which contracts must be in writing
4. authorizing agent to purchase or sell real
estate (power of attorney)
5. authorizing agent to find buyer or seller
for real estate, if agent will receive
compensation (listing agreement)
6. for assumption of a mortgage or deed
of trust
Statute of Frauds
Which contracts must be in writing
 All other contracts are not covered by statute
of frauds and need not be in writing.
Statute of Frauds
Which contracts must be in writing
 All other contracts are not covered by statute
of frauds and need not be in writing.
 Examples:
 lease expiring in less than one year
 contract for the sale of personal property
Statute of Frauds
Status of contract that doesn’t comply
 A contract subject to the statute of frauds is
unenforceable if it:
 isn’t in writing, or
 isn’t signed by the party to be bound
(the one who’s being sued).
Statute of Frauds
Status of contract that doesn’t comply
 A contract subject to the statute of frauds is
unenforceable if it:
 isn’t in writing, or
 isn’t signed by the party to be bound
(the one who’s being sued).
 But once the contract has been fully
performed, neither party can undo the
transaction based on the statute of frauds.
Statute of Frauds
Adequate written contract
 To fulfill statute of frauds, any “writing” is
adequate if:
 it identifies contract subject matter,
 indicates agreement between parties, and
 is signed by the party to be bound.
Statute of Frauds
Adequate written contract
 To fulfill statute of frauds, any “writing” is
adequate if:
 it identifies contract subject matter,
 indicates agreement between parties, and
 is signed by the party to be bound.
 May be printed, handwritten, or a combination.
 If conflict between printed and handwritten
parts, handwritten part takes precedence.
Summary
Mutual Consent and
Other Required Elements







Mutual consent
Termination of offer
Counteroffer
Fraud, undue influence, duress
Lawful objective
Consideration
Statute of frauds
Legal Status of Contracts
 Terms indicating to what extent a contract is
legally binding:
 void
 voidable
 unenforceable
 valid
Legal Status of Contracts
Void
 Void contract: no legal effect whatsoever.
Legal Status of Contracts
Void
 Void contract: no legal effect whatsoever.
 Parties are in same position they’d be
in if they had not attempted to make a
contract.
Legal Status of Contracts
Void
 Void contract: no legal effect whatsoever.
 Parties are in same position they’d be
in if they had not attempted to make a
contract.
 Contract can be disregarded.
 Neither party needs to withdraw,
because there’s nothing to withdraw
from.
Legal Status of Contracts
Void
 A contract that doesn’t fulfill one of the
basic requirements may be void.
Legal Status of Contracts
Void
 A contract that doesn’t fulfill one of the
basic requirements may be void.
 Examples:
 no consideration exchanged
 party is mentally incompetent
 minor is party to real estate contract
 objective is unlawful
 party’s signature is forged
Legal Status of Contracts
Voidable
 If contract is voidable:
 One party can choose whether to
withdraw or go through with the contract.
 Contract unenforceable by other party.
Legal Status of Contracts
Voidable
 If contract is voidable:
 One party can choose whether to
withdraw or go through with the contract.
 Contract unenforceable by other party.
 Examples:
 non-real estate contract entered into by a
minor (voidable by minor or guardian)
 contract entered into as a result of fraud,
undue influence, or duress
Legal Status of Contracts
Voidable
 Voidable contract is binding unless party
asks court to rescind contract.
Legal Status of Contracts
Voidable
 Voidable contract is binding unless party
asks court to rescind contract.
 Withdrawing party must take legal action
within reasonable time.
 Otherwise, court may rule that contract
has been ratified.
Legal Status of Contracts
Unenforceable
 Contract is classified as unenforceable if its
contents can’t be proved in court.
Legal Status of Contracts
Unenforceable
 Contract is classified as unenforceable if its
contents can’t be proved in court.
 Often a problem with unwritten contracts.
 Or if written contract is too vaguely
worded and parties can’t prove what they
intended, court will refuse to enforce it.
Legal Status of Contracts
Unenforceable
 Contract also unenforceable if statute of
limitations missed.
Legal Status of Contracts
Unenforceable
 Contract also unenforceable if statute of
limitations missed.
 Statute of limitations sets time limit for
filing a lawsuit.
 Party who misses applicable deadline
loses right to sue.
Legal Status of Contracts
Unenforceable
 Contract also unenforceable if statute of
limitations missed.
 Statute of limitations sets time limit for
filing a lawsuit.
 Party who misses applicable deadline
loses right to sue.
 California statute of limitations for contracts:
 Breach of written contract: 4 years
 Breach of oral contract: 2 years
Legal Status of Contracts
Unenforceable
 Court may also bar legal claim under
doctrine of laches.
 Legal principle that allows court to decide
there’s been an undue delay in asserting
the claim.
Legal Status of Contracts
Unenforceable
 Court may also bar legal claim under
doctrine of laches.
 Legal principle that allows court to decide
there’s been an undue delay in asserting
the claim.
 Different from statute of limitations, which
sets specific deadline for filing claim.
Legal Status of Contracts
Valid
 Contract is valid if:
 it meets all requirements for forming a
contract,
 its contents can be proved in court, and
 statute of limitations hasn’t run out.
Legal Status of Contracts
Valid
 Contract is valid if:
 it meets all requirements for forming a
contract,
 its contents can be proved in court, and
 statute of limitations hasn’t run out.
 If one party fails to perform as promised,
other can sue to have contract enforced.
Summary
Legal Status of Contracts
 Void
 Voidable
 Unenforceable
 Valid
Discharging a Contract
 Most contracts are discharged by
full performance:
 Each party performs as promised.
 Contractual relationship ends.
Discharging a Contract
 Most contracts are discharged by
full performance:
 Each party performs as promised.
 Contractual relationship ends.
 May be discharged without full performance,
if parties agree to:
 rescission
 cancellation
 assignment
 novation
Discharging a Contract
Rescission
 Rescission: Parties agree to terminate
contract and undo any steps already taken
to perform.
Discharging a Contract
Rescission
 Rescission: Parties agree to terminate
contract and undo any steps already taken
to perform.
 If either party has paid the party other
money or given any property, it’s returned.
Discharging a Contract
Rescission
 Rescission: Parties agree to terminate
contract and undo any steps already taken
to perform.
 If either party has paid the party other
money or given any property, it’s returned.
 Parties put themselves back in positions
they were in before contract was formed,
as if contract never happened.
Discharging a Contract
Cancellation
 Cancellation: Parties agree to terminate
contract without undoing whatever steps
they’ve already taken.
Discharging a Contract
Cancellation
 Cancellation: Parties agree to terminate
contract without undoing whatever steps
they’ve already taken.
 If money has changed hands, party who
received it is allowed to keep it.
Discharging a Contract
Assignment
 Assignment: One party withdraws and has
someone else take his place.
 Original party (assignor) assigns his
interest in contract to new party (assignee).
Discharging a Contract
Assignment
 Assignment: One party withdraws and has
someone else take his place.
 Original party (assignor) assigns his
interest in contract to new party (assignee).
 Assignor remains secondarily liable.
 Contract not really discharged.
 If assignee defaults, other party can still
sue assignor.
Discharging a Contract
Assignment
 General rule:
 one party can assign her interest without
other party’s permission,
 unless contract has clause expressly
forbidding assignment.
Discharging a Contract
Assignment
 General rule:
 one party can assign her interest without
other party’s permission,
 unless contract has clause expressly
forbidding assignment.
 Exception: Contract specific to one
person, such as hazard insurance policy,
typically can’t be assigned.
Discharging a Contract
Novation
 Novation: Original party withdraws and is
replaced by new party, and also is released
from further liability.
Discharging a Contract
Novation
 Novation: Original party withdraws and is
replaced by new party, and also is released
from further liability.
 Always requires consent of the other
original party.
Discharging a Contract
Novation
 Novation: Original party withdraws and is
replaced by new party, and also is released
from further liability.
 Always requires consent of the other
original party.
 Novation can also refer to substitution of
new agreement for old agreement, between
same parties.
Summary
Discharging a Contract
 Discharge
 Full performance
 Rescission
 Cancellation
 Assignment
 Novation
Remedies for Breach of Contract
 Breach of contract: When one party doesn’t
perform as agreed, without discharging
contract and without legal excuse.
Remedies for Breach of Contract
 Breach of contract: When one party doesn’t
perform as agreed, without discharging
contract and without legal excuse.
 If one party breaches contract, other party
has the right to sue.
Remedies for Breach of Contract
Four legal remedies for breach of contract:
 rescission
 damages
 liquidated damages
 specific performance
Remedies for Breach of Contract
Rescission
 As explained earlier, in rescission the
contract ends and any steps taken to carry
it out are undone.
Remedies for Breach of Contract
Rescission
 As explained earlier, in rescission the
contract ends and any steps taken to carry
it out are undone.
 Parties are put back in their pre-contract
positions.
Remedies for Breach of Contract
Rescission
 As explained earlier, in rescission the
contract ends and any steps taken to carry
it out are undone.
 Parties are put back in their pre-contract
positions.
 Rescission may be:
 result of agreement between parties, or
 court-ordered remedy for breach of contract.
Remedies for Breach of Contract
Damages
 Damages: An amount of money a court
orders breaching party to pay other party.
Remedies for Breach of Contract
Damages
 Damages: An amount of money a court
orders breaching party to pay other party.
 Compensates non-breaching party for
losses resulting from breach.
 Most common remedy for breach of
contract.
Remedies for Breach of Contract
Liquidated damages
 Liquidated damages: Remedy that parties
may agree to in advance, by including
provision in contract.
Remedies for Breach of Contract
Liquidated damages
 Liquidated damages: Remedy that parties
may agree to in advance, by including
provision in contract.
 If one party breaches, other party is entitled
to specified sum of money (the liquidated
damages).
Remedies for Breach of Contract
Liquidated damages
 Liquidated damages: Remedy that parties
may agree to in advance, by including
provision in contract.
 If one party breaches, other party is entitled
to specified sum of money (the liquidated
damages).
 The liquidated damages are the other
party’s only remedy; can’t sue for more.
Remedies for Breach of Contract
Liquidated damages
 In residential deposit receipt, parties usually
agree to treat good faith deposit as
liquidated damages if buyer defaults.
Remedies for Breach of Contract
Liquidated damages
 In residential deposit receipt, parties usually
agree to treat good faith deposit as
liquidated damages if buyer defaults.
 California has special rules that apply in this
context, which are explained in next lesson.
Remedies for Breach of Contract
Specific performance
 Specific performance: Court orders
breaching party to carry out contract.
Remedies for Breach of Contract
Specific performance
 Specific performance: Court orders
breaching party to carry out contract.
 Sometimes damages aren’t enough to
compensate for breach of contract.
 Non-breaching party wants to make other
party fulfill promise.
Remedies for Breach of Contract
Specific performance
 Specific performance not always granted.
 Court may decide damages award is
adequate compensation.
Remedies for Breach of Contract
Specific performance
 Specific performance not always granted.
 Court may decide damages award is
adequate compensation.
 General rule: Specific performance only
awarded if subject of contract is unique.
Remedies for Breach of Contract
Specific performance
 Specific performance not always granted.
 Court may decide damages award is
adequate compensation.
 General rule: Specific performance only
awarded if subject of contract is unique.
 Damages award won’t enable buyer to
obtain replacement if none exists.
 Court may be willing to grant specific
performance to real estate buyer.
Breach of Contract
Tender offer
 To be entitled to sue for breach of contract,
non-breaching party must be ready to
carry out his side of the bargain.
Breach of Contract
Tender offer
 To be entitled to sue for breach of contract,
non-breaching party must be ready to
carry out his side of the bargain.
 Before filing lawsuit, non-breaching party
is usually required to make a tender:
unconditional offer to perform as agreed.
Tender Offer
Anticipatory repudiation
 Anticipatory repudiation: One party
repudiates contract by making definite
statement that she is not going to perform
as agreed.
Tender Offer
Anticipatory repudiation
 Anticipatory repudiation: One party
repudiates contract by making definite
statement that she is not going to perform
as agreed.
 If anticipatory repudiation occurs, other
party can sue without making a tender.
Summary
Remedies for Breach of Contract
 Rescission
 Damages
 Liquidated damages
 Specific performance
 Tender offer