Reca Unit 2: Property Management And
Law Questions And Answers With
Verified Solutions 100% Correct!!!
Contract Definition - ANSWER✔✔ A binding agreement, enforceable by courts,
made between two or more persons, competent at law to enter into such
agreement, for consideration or value, to do or refrain from doing some lawful
and genuinely intended act.
Essential Contract Elements - ANSWER✔✔ -parties to contract must have legal
capacity to make contract
-object of contract must be lawful and contract must not be illegal
-must be consideration for the promises made by each party
-parties must be in agreement
-parties must intend to effect their legal relations (enter into contract)
-terms must be definite and clear
Termination/Discharge of Contract - ANSWER✔✔ 1. Mutual Agreement - the
parties will no longer be bound by the terms in the original agreement. There may
be collateral obligations to third parties arising out of the contract to pay some
form of penalty for cancelling the agreement
2. Performance - a party who performs a contract in accordance with its terms is
discharged from their obligations under it.
3. Frustration - impossibility of performance due to supervening and
unanticipated circumstances which are beyond the control of the parties and
arise after making the contract.
4. Operation of Law - such as bankruptcy by one of the parties or by alteration of
the contract by one party without the consent of the other
,5. Breach - a failure to fulfill an obligation under the contract. If the non-breaching
party suffers damage, they may have the right to seek legal damages through
courts. A breach can arise by one of three ways:
-One party announcing they won't perform the contract before the time of
performance;
-One party making it impossible to perform the contract;
-Failure to perform the contract at the time of performance
Remedies for Contract Breach - ANSWER✔✔ Monetary Damages - the object of
awarding damages is to place the injured party in the same position, as far as
money is concerned, as if the contract had not been breached. The injured party
can only recovery part of their loss that was reasonably foreseeable by the guilty
party of the breach at the date the contract was entered into. The injured party
who suffered damages must take all reasonable steps to mitigate the extent of
damages.
Quantum Meruit - if the contract has been discharged by breach, and the injured
party has done part but not all of what was promised under the contract, the
injured party is entitle to the reasonable value (quantum meruit) of what they had
already done from the party who committed the breach. The amount that should
be paid as merited by the service performed.
Specific Performance - Where damages are inadequate, the breaching party can
be compelled by courts to carry out their promise. It is a discretionary remedy.
Injunction - Where the promise in the contract was to refrain from doing
something, the court may aware an injunction to restrain the offender from doing
that act.
Law of Contract and the Property Manager - ANSWER✔✔ Property Management
Agreement - between owner and PM where PM agrees to perform services on
behalf of the landlord.
, Lease Agreement - between landlord and tenant negotiated by landlord, leasing
agent or PM.
Goods/Services Contract - between PM, as agent for the owner, and independent
contractors related to the complex/property. Examples:
-elevator maintenance
-landscaping
-snow clearing
Agency Law Terminology - ANSWER✔✔ Principal - party who authorizes the agent
to lease, sell, buy or exchange property (owner)
Agent - usually PM and the brokerage acting on behalf of the owner.
Agency Relationship - created when PM/brokerage and the owner agree to work
together
Client - party represented by the PM/brokerage, usually property owner or
landlord.
Third party or customer - customer is not owed fiduciary duties, but must receive
honesty and due care and skill from PM
Creation of Agency - ANSWER✔✔ Can result from mutual consent between
principal and agent. Can be created by express agreement or implied conduct.
Four ways to establish an agency relationship:
1. Agreement - between principal and agent. Agreement may be an express or an
implied agreement.
2. Ratification - when agent has acted without authority or in excess of granted
authority and the principal subsequently agrees to be bound by such actions.
3. Estoppel - when principal creates the impression to a third person that another
person is actin on their behalf as their agent
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