Contract Law in Real Estate (Case Study Sample)

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Case Study: Contract Law in Real Estate
Question 1
The first buyer, Jon D’Mann and Marsha Mellow, have many justifiable reasons to claim a contract exist between them and the seller, Boren T. Deal. In property law, an agreement is legally binding if it fulfills certain legal principles, which are discernable in the case study. The first factor is the intention of both parties to engage in a business transaction. Jon and Marsha began by deciding to purchase a house, then approached an agent to facilitate the purchase. They proceeded to view houses on offer and were excited to find one located in a desirable environment and with impressive home amenities. Secondly, they entered into a written contract agreement with the seller by filling the Real Estate Purchase Contract required by Utah law. The contract document stipulates the status of the house, initial offer, and a commitment fee amounting to $5000. Thus, buyers #1 show intention to purchase a home in good faith, find a suitable one and present a written offer as required by law.
The seller also showed the intention to sell and committed to it by engaging in negotiations and accepting the final offer. She began by listing the house on Multiple Listing Service, signifying the purpose to sell upon receiving a suitable offer. And when Jon and Marsh presented their proposal, she accepted but with several conditions outlined in Addendum #1. They include a counteroffer of $220,000, a $3000 concession fee, no warranties, and rented security and softer systems. Jon and Marsh accepted the counteroffer of $212,000, $5000 concession fee, among other conditions. The seller accepted the last offer without conditions and mailed her response. She was well informed about the posting rule under contract law, which stipulates that a bid is considered accepted once the seller puts the acceptance on the mailbox. Therefore, her change of mind and rejection of the offer are legally invalid.
Another aspect that makes the contract valid is mutuality obligation, which binds parties to an agreement if they performed their duties with a sound mind and without coercion. This fact is evidenced by parties’ willingness to engage freely. Genuine consent is validated by the lack of influence to either parties, false identity, or incorrect information. It means that the seller and the buyer entered into the contract voluntarily. Some of the mutual consent indicators include property agents’ involvement, signatures, and proper and consistent communication in the entire process. Besides, both the initial offer and the counteroffers seem serious, reasonable, and given in honesty. Throughout the process, neither the seller nor the buyer showed any interest in changing their mind. The contract, addendum #1, and addendum #2 are valid, with signatures solidifying the agreement between buyer #1 and the seller.
The second buyer, a UB Flash representative, also has justifiable reasons to believe that the seller has entered into a contract with his employer. Firstly, no information suggests that the seller had accepted an offer from Jon and Marsh. Buyer #2 is working because the seller must not seek help from an agent when selling her property. Therefore, several principles of contract law apply in this case. Firstly, the seller shows the intention to sell in the phone communication. Secondly, she makes an oral acceptance of the initial offer “I accept with no reservations or conditions.” As long as UB Flash proves the existence of a verbal agreement in court, then the contract is legally binding.
Question 2
The case study presents several variances that might invalidate contracts between the seller both buyers. The first outright discrepancy concerns the age factor given Jon is 17 years old. As a general rule, any person is allowed to enter into contractual obligations. However, the law states that a legally binding contract should be between parties with the mental and physical capacity to sign the contract. The mental status requirement relates to an individual’s ability to understand the agreement’s terms and outcomes. Technically, a minor is considered incapable of making sound decisions, which applies to anyone aged below 18 in most states. Meaning that the seller and buyer #1 did not break any law, but the contract is not enforceable by a court of law. What happens is that the law allows the minor to break the deal at a reasonable time without facing legal consequences. The legal term for such an act is “voiding” or “disaffirming.” But the minor must certainly restore the seller to his or her initial financial state or face criminal charges.
Buyer #1 and the seller also committed mistakes when they failed to communicate through their respective agents. Hiring an agent to represent you in property buying or sale means giving the authority to transact on your behalf. I think buyer #1 breached this requirement when Marsh contacted the seller’s broker to accept his offer unconditionally. Indeed, the seller’s broker can consider the phone call void since the communication did not pass through the official channel. The argument could be that he or she could not enforce the sale since there was no consent from Marsh’s partner. Similarly, the seller ought to have involved her broker in breaking the contract. The reason would be the same – there was no official communication from the buyer’s agent. Bother parties will have a lot of explanation to do regarding their decisions to work outside their agents. Such actions depict