Elements of a Contract CAAR October 2020 The Statute of Frauds THE STATUTE OF FRAUDS [4319] • Statute of Frauds: A statute which requires certain types of contracts to be in writing in order to be enforceable. Although statues of frauds vary somewhat from state to state, the following types of contracts must be in writing to be enforceable: • contracts for the sale or lease of, or a mortgage on, real property (e.g. land, fixtures); • contracts that cannot, by their terms, be performed within one year after the date the contract was formed; • collateral contracts, such as promises to answer for or guaranty the debt or duty of another person; • promises made in consideration of marriage (i.e., prenuptial agreements); and • contracts for the sale of goods valued at $500 or more. 1 Elements of a Contract CAAR October 2020 THE STATUTE OF FRAUDS: EXCEPTIONS Ucc2-201/4319.04 • Exceptions to the Statute of Frauds: A contract which might otherwise be unenforceable because it is not in writing may be enforced to some degree as follows: • Partial Performance Accepted: If a buyer has taken partial possession of real or personal property and paid that part of the contract price attributable to the property received, and if the parties cannot be returned to their pre-contractual positions, a court may order that the remainder of the contract be specifically performed – that is, performed according to the precise terms of the contract. o Under the Uniform Commercial Code, an oral contract is enforceable to the extent that the seller has accepted payment, or the buyer has accepted delivery of the goods covered by the oral contract. • Promissory Estoppel: If a promisor makes a promise on which the promise justifiably relies to the promisee’s detriment, the promisor may be estopped from denying the existence and validity of the contract. 2 Elements of a Contract CAAR October 2020 THE STATUTE OF FRAUDS: SUFFICIENCY OF THE WRITING A written contract, signed by both parties, satisfies the requirements of the statute of frauds. What else will suffice? • A writing signed by the party against whom enforcement is sought. • A confirmation, invoice, sales slip, check, or fax, or any combination thereof; or • Several documents which, in combination, provide the terms for an agreement. • An agreement does not need to be signed at the bottom but may be signed anywhere on the agreement; moreover, initials will suffice where there is no signature. • The writing(s) need only contain the essential terms of the contract: name of the parties, subject matter, quantity, and consideration. Whether price is an “essential” term depends on the type of contract in question. 3 Elements of a Contract CAAR October 2020 The PAROL EVIDENCE RULE 4320 Parol Evidence Rule: A substantive rule of contract law under which a court will not admit evidence of the parties’ prior negotiations, prior oral or written agreements, or contemporaneous oral agreements if that evidence contradicts or varies the terms of a written contract. • Integration: The determination of whether parol evidence will be considered revolves around the court’s determination of whether the written contract is integrated - - that is, if it constitutes the final expression of the parties’ agreement. The PAROL EVIDENCE RULE: EXCEPTIONS 4320.04 Courts have recognized numerous exceptions to the operation of the parol evidence rule. In addition, there are certain statutory exceptions which apply to contracts under the Uniform Commercial Code. Among the better- established exceptions are the following: . Evidence of subsequent modification; . Evidence of mistake, fraud, or misrepresentation in the formation of the written contract; . Evidence which may resolve an ambiguity and/or fill in a missing term or condition in the written contract; . Evidence of prior dealing between the parties, usage of trade in the relevant locale and/or trade, and course of performance under the contract by the parties; . Evidence of an oral condition precedent to the written contract; and . Evidence of an obvious or gross clerical error. 4 VIRGINIA REALTORS® EXCLUSIVE AUTHORIZATION TO SELL OWNER AUTHORIZATION REGARDING INTERNET Internet advertising is one of the ways information concerning real property offered for sale is disseminated to real estate agents and brokers as well as the general public. The property owner has the right to determine whether or not their property information is displayed on the Internet and if so the manner in which it is presented. Section 7(f) of the Virginia REALTORS® Exclusive Authorization to Sell allows the property owner to authorize or prohibit the display of the property on the Internet. If authorized, it also permits the property owner to limit the display of property reviews and automated estimates of market value on the Internet. Owners must initial beside the appropriate responses in Section 7(f). The OPT OUT OF THE INTERNET section should only be completed if the Owner does not wish to have their property address displayed on the Internet or does not wish to have ANY information concerning the property and its availability for sale published on the Internet. Otherwise Option A and B should be left blank. Terms and Definitions: Property Reviews/Blogging – Some web sites allow third parties to publish public commentary or feedback related to a particular property. This type of public online journaling is sometimes referred to as a blog. Automated Estimate of Market Value – Also known as AVM or Automated Valuation Model. An AVM is a computer generated estimate of residential property value that is calculated using computer software models and recent sales of similar homes. VR Form 400 Revised 10/19 Reviewed 10/19 This contract is for use by Abby Tammen. Use by any other party is illegal and voids the contract. VIRGINIA REALTORS® EXCLUSIVE AUTHORIZATION TO SELL (This is a legally binding contract, if not understood, seek competent advice before signing) This AGREEMENT made as of , by and between (“Owner”); and (“Broker”), provides: 1. In consideration of services rendered by Broker to Owner, Owner grants to Broker the EXCLUSIVE and irrevocable right to sell certain real estate, and all improvements thereon which is owned by Owner and which is hereafter described (all herein called the “Property”), during the period commencing on and expiring at midnight on (the “initial period of time”), for the price of Dollars ($ ) (“Listing Price”), payable in cash, or at such price and/or on such terms as may be agreed by the parties. 2. REAL PROPERTY: The Property is located in the City or County of and is described as follows: and more commonly known as (i.e., street, town, village, etc.). 3. BROKER FEE: (a) If the Property is sold or exchanged by Broker, or by Owner with or without the assistance of Broker, within the initial period of time or any extension thereof, Owner agrees to pay Broker a fee of (the “Fee”). If, within days after the expiration of the initial period of time or any extension thereof, the Property is sold or exchanged by Broker, by Owner, or by any other person, to a purchaser or purchasers to whom the Property was shown, offered, or introduced by Broker, or by any licensed broker or salesperson employed by or affiliated with Broker, Owner agrees to pay Broker the Fee. Notwithstanding the foregoing, Owner shall not be obligated to pay the Fee to Broker if, after the expiration of the initial period of time or any extension thereof, Owner enters into an exclusive authorization to sell or exchange the Property with a licensed broker or salesperson, other than Broker or a licensed broker or salesperson employed or affiliated with Broker, and the Property is sold or exchanged pursuant to such exclusive authorization. For purposes of the Agreement, if an offer is presented to Owner within the initial period of time or any extension thereof, but (i) is accepted by Owner after expiration of the initial period of time or any extension thereof, or (ii) Owner make a counteroffer which is accepted by the purchaser after the expiration of the initial period of time or any extension thereof, the Owner shall pay Broker the Fee as if the Property had been sold during the initial period of time or any extension thereof. (b) Broker has advised Owner of Broker’s firm policy regarding cooperating with and compensating other real estate licensees. Owner authorizes Broker to cooperate with and compensate other brokers via the following [select one]: % of the gross sales price OR the sum of $ . Such compensation shall be paid by Owner at settlement. Owner acknowledges that the cooperating fee set forth in this paragraph represents an obligation of Broker to a selling broker per MLS rules, and agrees that Owner is responsible to pay this amount to Broker as part of the Fee, which will then be paid to the cooperating broker. Owner understands the responsibility for the payment of a cooperating broker’s compensation may be determined as a result of civil action or arbitration, or in a separate agreement between Broker and a cooperating broker claiming such fee; provided however, such fee shall not exceed the amount set forth in this paragraph 3(b) without consent of Owner. Owner agrees to participate fully, at Owner’s sole expense, in any legal action or arbitration proceedings that may arise with respect to the compensation due to a cooperating broker. Owner shall indemnify and hold Broker harmless from any monetary loss suffered by Broker due to any award against Broker arising from Owner’s nonpayment of compensation that is due to a cooperating broker as a result of the sale of the Property. Owner agrees not to negotiate Broker’s Fee or any purchaser agent/representative’s compensation in a real estate sales contract for the Property.