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INTRODUCTION TO COMMMERCIAL REAL ESTATEMANAGEMENT 490October 28, 2009

+Next Two Classes: Contracts

General Contract Law Principles

Commercial Real Estate Contracts RANM Form ______ Vacant Land Sale and Purchase

Agreement

+What is a Contract?

Legally enforceable agreement to do (or not do something)

Express Contract

Implied Contract

Bilateral Contract

Unilateral Contract

+Legal Effect of Contracts

Enforceable

Void Never went into effect

Voidable Obligations can be avoided by a party

Unenforceable Once enforceable, but no longer enforceable

+Essentials of a Valid Contract

Competent Parties Minors Incapacitated Persons Duress Power of Attorney Entities

Corporations Limited liability companies Trusts

+Essentials of a Valid Contract

Mutual Agreement/Meeting of the minds Complete agreement on all essential terms

Offer and Acceptance Accept Reject

Counteroffer Acts like a new offer that can be accepted or rejected

+Essentials of a Valid Contract

Lawful Objective Unlawful Against public policy

Consideration Legal consideration Exchange of promises Adequacy of consideration

+Essentials of a Valid Contract

Contract must be in writing Statute of Frauds New Mexico Statute of Frauds Why should contracts be in writing? Parole evidence rule

New Mexico rule-almost anything can be ambiguous

+When a Contract May not be Valid

Fraud Intention to deceive

Misrepresentation Reckless Negligent

Mutual mistake Mutual mistake of fact (not law)

Lack of Capacity

+Performance of Contracts

Performance/Discharge of Contracts

Assignment of Contracts “personal” contracts not assignable

Novation Substitution of a new contract

Inability to Perform Deceased person Corporate existence ceases

+Breach of Contract

Failure to perform vs. default Notice and cure periods Usually governed by terms of contract If not, law will determine when default occurs No remedy until there is a “default”

+Remedies for Default

Partial Performance

Unilateral Rescission

Money Damages Incidental damages Consequential damages Attorneys’ fees and costs

Liquidated Damages

Specific Performance

Mutual Rescission

+Defenses against Enforcement

Statute of Limitations Purpose New Mexico: suit must be brought within six years for an

action based on breach of a written contract New Mexico: four years for fraud or negligence claims