The basic question “What is a contract?” is a worthy thing to ponder. At their core, contracts are agreements between two or more parties, all with competence to enter into the contract, based on sufficient consideration, to lawfully do or not do a particular thing. It’s a stringy definition that can be broken into its component parts.
Contracts are agreements between two or more parties, all with competence to enter into the contract, based on sufficient consideration, to lawfully do or not do a particular thing
Contracts are formed as agreements between several persons; which is why a disclosure is not a contract. A disclosure is a monodirectional statement from one party to another. There is no agreement going on in a disclosure. When a Seller sends a SPDS to a Buyer, the Buyer doesn’t have to “accept” it and can’t “reject” the disclosure or counter it [Buyers are able to claim the SPDS was not properly delivered and can terminate/revoke the sales agreement as a result of the SPDS, but it’s not the same as rejecting the disclosure]. The Buyer simply receives the SPDS. As long as delivery occurred, disclosure has happened. Contracts can also be multi-party. It’s not always just a two party contract, some more complicated deals can have several parties contracting at the same time. Luckily, real estate tends to be a one party seller-one party buyer transaction.
Contracts are agreements between two or more parties, all with competence to enter into the contract, based on sufficient consideration, to lawfully do or not do a particular thing
If the contracting parties are not able to validly contract, we typically won’t treat it as an enforceable contract. Sales by or to a mentally infirm person or to a child will generally be unenforceable because the contract is not entered in to between two competent parties. While mental competence is assumed as a baseline in Oregon, it is important to realize that some purchasers and some sellers may need a third-party to act for them. If you begin to note that a client is failing to understand basic concepts of the contract or that the client is forgetting major elements of the contract that a reasonable person would normally remember, contact your principal broker and discuss steps that can be taken to ensure the validity of the contract.
Contracts are agreements between two or more parties, all with competence to enter into the contract, based on sufficient consideration, to lawfully do or not do a particular thing
Everyone in the contract has to be getting something out of it. A contract cannot and should not ever be a single sided windfall where one person is getting all the benefit and the other party is getting nothing. For example, “I’ll buy your house for $0,” is typically invalid unless the person purchasing the property for $0 is taking on debts or otherwise helping out the seller. In those instances though, it’s not so much “I’ll buy your house for $0,” as “I’ll take over all your debts related to that property for $0, but you need to give me the property.”
Contracts are agreements between two or more parties, all with competence to enter into the contract, based on sufficient consideration, to lawfully do or not do a particular thing
Contracts can be struck to do a thing or to stop someone from doing a thing. Nondisclosure agreements, agreements to not sell a house for a few months, agreements to paint a house, all can be valid contracts. A contract cannot, however, be valid if it is unlawful. When multiple people all get together and agree to do something together illegal, we don’t treat it as an enforceable contract, rather the simple act of agreeing to something illegal can be considered conspiracy to commit a crime.