David Perez

Professor Hagen

Real Estate Principles

13 December 2010

Final Paper:

Analysis

There are several types of contracts. An expressed contract “occurs when the

parties to the contract declare their intentions either orally or in writing” (Jacobus 105).

The other types of contracts are bilateral, and unilateral. A bilateral contract is when a

promise is exchanged for another promise. A unilateral contract occurs when a promise

is exchanged for a specific performance. There are 5 essentials of a valid contract. A

contract will be legally valid, and binding and enforceable when the five essentials are

met. The five essentials are: legally competent parties, mutual agreement, lawful

objective, consideration or cause, and the contract in writing (if required by law).

A competent party needs to be of age. Minors do not have

the ability to enter a contract that is legally binding. This protects minors from entering a

contract that they may not completely understand, due to age. The exception to this is

necessities. Necessities may include food and clothing.

Mutual consent, mutual assent, or meeting of the minds is the same as the

requirement of mutual agreement. This means that there must be a “mutual willingness

to enter into a contract” (Jacobus 109). Mutual agreement can be shown by the words
and acts of the people or parties involved in the contract. They must show that there is a

valid offer and an unqualified acceptance, as well as not being fraudulent, misleading, or

done by mistake. Offer and acceptance involve an offeror and an offeree. The offeror

makes the offer to the offeree. The offeree must communicate acceptance to the offeror.

A contract can not ask for laws to be broken. If a contract does ask for laws to be

broken it is void or unenforceable. An example of this may be a debt contract. If the

debt contract asks for an interest rate higher than the interest rate allowed by state law it

would be void. Contracts that are also unenforceable are those that are contrary to

general public policy.

In addition to legally competent parties, mutual agreement, and lawful objective a

contract, to be enforceable, must be supported by consideration or cause. Consideration

is “an act or promise given in exchange for something” (Jacobus 110). Consideration is

used to show that a bargain has been struck between to or more parties. “The size,

quantity, nature, or amount of what is being exchanged is irrelevant as long as it is

present” (Jacobus 110). Examples of consideration are things of value like money, a

promise to do something, property or personal services. If there is no consideration from

any party the contract fails to be legally binding.

The last essential element of a contract is that it is in writing when required by

law. This is known as the Statute of Frauds, and the “the purpose is to prevent frauds by

requiring that all contracts for the sale of land, or an interest in land, be in writing and

signed to be enforceable in a court of law. Most states have adopted the Uniform
Commercial Code. One of the requirements is that the sale of personal property with a

value of over $500 be in writing.

In the document entitled “Offer to Purchase” there is a lot of information. The

sellers are Mr. and Mrs. Ralph w. Hanusa. They are planning to sell the property known

as 820 N. Lark Street in the city of Oshkosh, county of Winnebago, Wisconsin. It is

recorded. The property is not subject to the sale of other property. The offer and

resulting agreement are “subject to the buy obtaining a first mortgage conventional loan

in the amount of $61,681 with a fixed interest rate of 10% for 30 years and no more than

1 point. However the buyer may obtain some other financing terms provided such terms

are suitable to the buyer” (Residential offer to purchase). At three it states that it is

necessary to receive a building inspection report. This must meet the personal

satisfaction of the buyer. The kitchen table, unattached kitchen cabinet, all curtains,

shades and curtain rods are all considered personal property. By stating these items the

buyer Willis W Hagen II and Janet W. Hagen will be owners as a results of this contract

to sell the real estate. The mailbox rule or the postal acceptance rule is a term of common

law contracts which determines when a contract has been formed where the parties are

communicating via the mail. This differs from the contract because it is to be personally

delivered to the buyer. It needs to be delivered by 7:00 p.m. on March 1, 1988. The

location of the delivery is 307 Dove Street, Oshkosh, Wisconsin. The offer needs to be

closed at the office of the buyer’s mortgagee. It needs to be done on or before April 28,

1988 or else the contract will not be binding.

 The legal effect of a counter-offer under the common law of contracts is that the

offeree has rejected the previous offer. Although it may appear that the offeree is only

amending the offer he is actually making a new offer. In the counter offer the previous

terms and conditions remain that were discussed in the offer. The thing that changes is

that paragraph 4 on line 38 of the offer is to have the condition that the purchase shall be

satisfied or waived by March 31m 1988. The subject0to0insp4ection clause needs to be

satisfied upon the receipt of a written memo by the date of March 31, 1988 where the

subject0to financing clause shall be satisfied by a delivery of a financing commitment on

the same date.

In lines 33-36 of the “Offer to Purchase.” The offer and resulting agreement are

subject to the buyer receiving a building inspection report. This needs to meet the

personal satisfaction of the buyer. The “notification of Inspection: informs Ralph W.

Hanusa and Doris M. Hanusa that the buyers have had the building inspection and that it

meets their personal satisfaction. That condition has been met.

The borrowers for the note are the Hagen’s. The lender is Wisconsin Axle Credit

Union. The loan is in the amount of $61,600.00, which is the principal. The interest that

will be charged under this note is 9.25%. Monthly payments need to be made on the fifth

day of each month. This will begin on June of 1988. The monthly payment will be made

at 250 North Sawyer, Oshkosh, WI 54901 until May 5, 2018. Each monthly payment is

for the amount of $506.77. All prepayments, which is of principal only, needs to be

accompanied by a written document notifying the Note Holder. There is no prepayment

charge. If they make a partial prepayment there will be no changes in the due date or in
the amount. If there is one it will only be if the Note Holder agrees in writing to the

changes. There are late charges for overdue payments. They will be in the amount of 5%

of the overdue payment of principal and interest. The payment is considered late by the

end of 15 days after the date it is due. These are calendar days. There can only be one

late charge for each late payment. If there is default the Note Holder will send a written

notice. If they do not pay on a certain date the Note Holder may require them to pay

immediately. They would have to pay the full amount of principal which has not been

paid. The note is a uniform instrument. It protects the Note Holder.

The mortgage given on April 21 identifies the mortgagors as Willis W. Hagen, II

and Janet W. Hagen. They are husband and wife. The security interest is given to

Wisconsin Axle Credit union. They are organized and exist under the laws of Wisconsin.

There address is 250 N. Sawyer Street, Oshkosh, Wisconsin 54901. The address of the

property is 820 North Lark Street, Oshkosh WI, 54901. The legal description of the

property that is located in Winnebago County, Wisconsin is: North ½ of Lot 9 and all of

lot 10 in Block “G”, Northwestern Car and Machine Company’s First addition, Sixteenth

Ward, City of Oshkosh, Winnebago County, Wisconsin.

In the section application of payments the ways payments are applied is

discussed. It states that “Unless applicable law provides otherwise, all payments received

by Lender under paragraphs 1 and 2 shall be applied: first to late charges due under the

Note; second to prepayment charges due under the Note; third to amounts payable under

paragraph 2; fourth, to interest due; and last to principal due” (Mortgage). In section 9
condemnations is discussed. It says that the proceeds will be applied to the sums

secured by the mortgage. It does not matter whether or not they are due.
 Works Cited

Jacobus, CHarles J. Real Estate Principles. Eleventh Edition. Mason, OH: Cengage
Learning, 2010. Print.