Management 200 Intro to Law Professor Dawson MWF 7 30 8 50 May 19 2014 Contracts An enforceable promise Can be oral or written Freedom to contract constitutional right Few limitations Types of Contracts contracts can fall into more than one category Executory remains to be performed one side or the other Examples magazine subscription paid money at the beginning of the year magazine is sent to you every month renting an apartment paid rent at the beginning landlord has to provide services that were agreed upon Enforceable contract courts can enforce Example courts will enforce someone to pay Void courts won t enforce something that goes directly against law Example contract to kill someone Express terms are clearly spelled out Example terms and conditions agreed to for software Implied terms are not spelled out Example doctor s office paying reasonable fee knowing what doctors do when they see you Voidable not necessarily void right away Example if someone buys a car before they turn 18 they can return it if they bring it back within a reasonable time after turning18 or before Contract Requirements 1 Offer Present intent to contract Definite terms Subject Price Payment terms Communicated Duration of Offer Until revocation revoking offer Until rejected Passage of a reasonable time really fuzzy Passage of time set in contract 2 Acceptance Who Unequivocal no changes Equivocating making changes Counter Offer make equivocating offer they can then accept new offer 3 Consideration Value on both sides of contract NOT EQUAL Why is this included Shows difference between gift and contract Breach of Contract Remedies Damages Liquidated Damages formula Specific Performance ordered to do action that was promised May 21 2014 Real Property Earth dirt land and buildings Interests in real estate Fee Simple Absolute You own everything earth building under and don t owe anything to a bank everything is paid off etc Leasehold Life Estate Lease rental agreement interest not ownership tenant Right to occupy landscape for a lifetime left to a remainder University of Washington is remainder for life estates keeps tuition down Joint Tenants Subsurface Interests Own property jointly usually husband and wife Below the surface water gas oil etc Above Surface Interests Water telephone lines height of house how low airplanes can fly Easement Restrictive Covenants Right to go across property driveway power line pipelines Restrictive promise making promises about what you will or won t do to the property Deeds Ownership of real property like title of a car 5 Types we re only learning 2 Statutory Warranty Deed Seller prepares and gives deed to buyer seller says I own it I can sell it I will protect you Strongest deed you can get powerful only as good as person making promises Quit Claim Deed If I sign this deed I will quit claiming this property Used for divorces clears up title issues in families Title Insurance always buy this In title own property deed Insured for lifetime that you own this property 2 Types of Policies Normal Policy Extended Coverage Cheap policy you own the property Buying a House Not only do you own it but your house is on it survey is done to confirm Seller gives buyer Deed Buyer gives seller down payment ex 10 000 Buyer signs note and Mortgage Now more commonly replaced by Deed of Trust so the lender can give the seller the remainder of cost Lender gives seller remainder of sale ex 90 000 Mortgage Contract spells out everyone s rights and responsibilities if you make payments you can stay in the house if not foreclosure Note Calculates how much you owe debt one page Accelerated Clause In mortgage if you miss on payment then you owe full amount Slow for banks takes 12 months to foreclose Banks didn t like it Now mortgages aren t used anymore Deficiency good for bank sell house for 85 you owe 90 you owe the bank 5 Deed of Trust Banks give up deficiency but want it fast can throw people out in 4 months if you miss one payment Most common way to buy a house now Buying on Contract Lower down payment ex 2 000 Note and Contract ex 98 000 No lender Whatever you negotiate payments interest rates Problem with transaction there s no deed Only receive deed when last payment is made Bank Collection Account At time of purchase seller gives deed to bank monthly payments from buyer go to bank then to seller bank has instructions to give buyer deed once last payment is made Buying house relatively simple Buying downtown office very complicated Adverse Possession AEIOU Adverse use Exclusive use not shared UnInterrupted use Open and notorious out in the open Under a good faith claim of right think you re in the right 10 years Basically If you use property long enough without objection you own it If all of these criteria are filled then you own it May 23 2014 With right to survivorship when joint tenants husband and wife when one dies all ownership goes to surviving person Statute of Frauds Certain contracts must be in writing Real Estate Rental Agreements Involving a lot of money Landlord Tenant History used to be a lot of abuse to tenants Landlord Tenant Act Revised Code of Washington RCW State Law 59 18 Very favorable to landlords not a lot of help to tenants Line item veto by governor at the time crossed off parts he didn t think were fair then signed it now is relatively fair to both sides 4 Parts 1 Landlord Duties 2 Tenant Remedies 3 Tenant Duties 4 Landlord Remedies Landlord Duties Fit to live Meet code Repair damage Change locks City of Seattle law Tenant Remedies T gives notice to LL LL fixes T gives notice to LL T fixes charges LL T gives notice to terminate tenancy serious breach LL gives notice to T T fixes LL fix bill T LL notice to terminate tenancy major breach T not paying rent Tenant Duties Pay rent to landlord or trust Comply with law Not damage property Comply with apartment rules Landlord Remedies Landlord s Right to Enter Emergency or Abandonment Otherwise 2 days notice Termination of Tenancy Notice Example Cleaning Fee Damage Deposit Have to give 20 days notice before the rental period you want to move out in If you want to move out anytime in February must give notice by January 10 If you want to move out anytime in November must give notice by October 10