Deal or no Deal: Breach of Contract

At law, a valid contract contains an offer, an acceptance, mutual assent to the terms of the contract and valuable consideration. In the ideal, perfect world, a valid contract is formed and both parties perform their ends of the bargain and benefit from the bargain. Unfortunately, we live in the real world and contracts are often breached. A breach of contract can result from delays, financial problems, or even a change of heart.  A breach can occur when a party fails to perform on time, does not perform in accordance with the terms of the agreement or where a party does not perform at all. The law recognizes a remedy for this breach. Most commonly, a breach of contract will result in reformation of the contract so that the original terms of the agreement are carried out, restitution, so that the non-breaching party who has conferred a benefit to the breaching party may recover that benefit or money damages being awarded to the aggrieved party.  

Courts look to construe a breach of contract as either a material or minor breach. The legal remedy for the breach will depend upon whether the breach was classified as a minor or material breach. Suppose a homeowner contracts with a plumber to replace all the plumbing in her house and in the terms of the agreement she stipulates that the pipes that will be hidden behind the walls must be red. If the plumber instead uses blue plumbing, the court will construe his breach as a minor breach. As a result, the Court would probably deem monetary damages as the adequate remedy. But, here, it is unlikely that homeowner would recover monetary damages because the color has no value attached to it. Assume, in addition, the homeowner insisted the plumber use iron pipes instead of copper pipes. If the plumber uses copper instead that, in turn, won’t last as long as the iron pipes would, then he is in material breach of the contract. Here, the Court would probably deem that specific performance is the adequate remedy which would result in the plumber having to change the copper pipes to iron pipes.

If you have suffered pecuniary harm from a bad deal, then contact Daniel Selwa. You may have a breach of contract action and as a result you may recover monetary damages and/or other legal remedies. 

Contracts in Real Estate Transactions

Contracts are the basis for every real estate transaction.  Contracts are also the first thing that a lawyer looks at when something goes wrong with a transaction.  For this reason, it is very important for a real estate agent to have a firm grasp on contract law.

First the basics.  There must be an offer and there must be an acceptance of that offer.  This is called a meeting of the minds.  Pretty simple right?  Well, you would think but here is where it gets more complicated.  No one should use a word or phrase in a contract unless they came up with it or unless they are aware of every implication which can be drawn from that word or phrase as it relates to the contract.  Oh, and commas really matter.  One comma can change the meaning of an entire clause.  I have seen countless times where a supposed boiler plate paragraph was inserted which contradicted the rest of the contract and called into question the entire contract itself.

There is no shame in keeping things simple.  One should not try to be impressive at this level of the game with flowery words or complex phrases, the meaning of which is not totally understood by the author.  Be specific with who is entering into the contract.  First, Middle, Last, (suffix, if applicable) of each party needs to be spelled out in the contract.  Do not use "Owner of Record" or any type designation which does not specifically name the parties involved.  As a real estate agent, you should be protecting your client to the best of your ability and if "Owner of Record" runs off with a earnest money deposit, John A. Smith needs to know who to name in the lawsuit to recovery monies.  Make sure money is actually exchanged when an earnest money is given or received.  I know this sounds stupid, but I have seen where agents have fabricated the existence of the earnest money deposit.  Guess who got sued.  The agent.  Never take, "don't worry about that clause" as an answer.  I have seen this as well and it became a problem they had to worry about.

Last and most importantly, if you don't know, ask someone that does.  

Daniel A. Selwa, II, would like to announce the relocation of his real estate office to 302 Main Street, North Myrtle Beach, SC 29582.  If you have a closing and you want it done right, contact Daniel A. Selwa, II.