UW MGMT 200 - Contracts

Management 200: Intro to LawProfessor DawsonMWF 7:30-8:50May 19, 2014ContractsAn enforceable promiseCan be oral or writtenFreedom to contract=constitutional rightFew limitationsTypes of Contracts (contracts can fall into more than one category)-Executory: remains to be performed, one side or the otherExamples: 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 enforceExample: courts will enforce someone to pay-Void: courts won’t enforce, something that goes directly against lawExample: contract to kill someone-Express: terms are clearly spelled outExample: terms and conditions agreed to for software-Implied: terms are not spelled outExample: doctor’s office-paying reasonable fee, knowing what doctors do when they see you-Voidable: not necessarily void right awayExample: 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 Requirements1. OfferPresent intent to contractDefinite terms- Subject- Price- Payment termsCommunicatedDuration of OfferUntil revocation (revoking offer)Until rejectedPassage of a reasonable time (really fuzzy)Passage of time set in contract2. AcceptanceWhoUnequivocal- no changesCounter Offer-make equivocating offer, they can then accept new offer3. ConsiderationValue on both sides of contract (NOT EQUAL)**Why is this included??Shows difference between gift and contractBreach of ContractRemediesDamages $$Liquidated Damages-formulaSpecific Performance-ordered to do action that was promisedMay 21, 2014Real Property (Earth-dirt, land, and buildings)Interests in real estate-Fee Simple AbsoluteYou own everything (earth, building, under) and don’t owe anything to a bank, everything is paid off, etc-LeaseholdLease, rental agreement, interest not ownership, tenant-Life EstateRight to occupy landscape for a lifetime, left to a remainder*University of Washington is remainder for life estates, keeps tuition down-Joint TenantsOwn property jointly, usually husband and wife-Subsurface InterestsBelow the surface, water, gas, oil, etc.-Above Surface InterestsWater, telephone lines, height of house, how low airplanes can fly-EasementRight to go across property, driveway, power line, pipelines-Restrictive CovenantsRestrictive promise, making promises about what you will or won’t do to the propertyEquivocating= making changesSeller gives buyer Deed Buyer gives seller down payment (ex: $10,000)DeedsOwnership of real property, like title of a car5 Types- we’re only learning 2-Statutory Warranty DeedSeller 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 DeedIf I sign this deed, I will quit claiming this property*Used for divorces, clears up title issues in familiesTitle Insurance*always buy this“In title” = own property, deedInsured for lifetime that you own this property2 Types of Policies-Normal PolicyCheap policy, you own the property-Extended CoverageNot only do you own it, but your house is on it, survey is done to confirmBuying a HouseBuyer signs note and Mortgage (Now more commonly replaced by Deed of Trust) so the lender can give the sellerthe remainder of costLender gives seller remainder of sale (ex: $90,000)*MortgageContract, spells out everyone’s rights and responsibilities, if you make payments you can stay in the house, if not=foreclosure*NoteCalculates how much you owe, debt, one page*Accelerated ClauseIn mortgage, if you miss on payment then you owe full amountSlow for banks, takes 12 months to forecloseBanks 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 TrustBanks give up deficiency, but want it fast---can throw people out in 4 months if you miss one paymentMost common way to buy a house nowBuying on ContractNo lender!Whatever you negotiate-payments-interest ratesProblem with transaction: there’s no deed! Only receive deed when last payment is made*Bank Collection AccountAt 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 complicatedLower down payment (ex: $2,000)Note and Contract(ex: $98,000)Adverse Possession (AEIOU)Adverse useExclusive use (not shared)UnInterrupted useOpen and notorious (out in the open)Under a good faith claim of right (think you’re in the right)10 yearsBasically: If you use property long enough without objection, you own itIf all of these criteria are filled, then you own itMay 23, 2014With right to survivorship: when joint tenants (husband and wife) when one dies all ownership goes to surviving personStatute of FraudsCertain contracts must be in writing-Real Estate-Rental Agreements-Involving a lot of moneyLandlord/TenantHistory: used to be a lot of abuse to tenantsLandlord/Tenant Act: Revised Code of Washington (RCW-State Law) 59.18Very favorable to landlords, not a lot of help to tenantsLine 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 sides4 Parts1. Landlord Duties2. Tenant Remedies3. Tenant Duties4. Landlord Remedies-Landlord DutiesFit to liveMeet codeRepair damageChange locks *City of Seattle law-Tenant RemediesT gives notice to LL, LL fixesT gives notice to LL, T fixes, charges LLT gives notice to terminate tenancy---serious breach-Tenant DutiesPay rent-to landlord or trustComply with lawNot damage propertyComply with apartment rules-Landlord RemediesLL gives notice to T, T fixesLL fix, bill TLL notice to terminate tenancy---major breach (T not paying rent)Landlord’s Right to EnterEmergency or AbandonmentOtherwise, 2 days noticeTermination of Tenancy-NoticeHave to give 20 days’ notice before the rental period you want to move out inExample: If you want to move out anytime in February, must give notice by January 10If you want to move out anytime in November, must give notice by October 10-Cleaning Fee-Damage