Contract Basics in Washington
Every contract requires offer, acceptance, and consideration. An offer means a promise contingent on a particular act. An acceptance entails an express act agreeing to the terms of the offer. Consideration requires each party exchange something of value. The “statute of frauds” requires a writing for contracts in consideration of marriage, contracts that cannot be performed within one year, transfers of land, contracts by the executor of an Estate to pay a debt of the estate with his own money, contracts for sale of goods over $500.00, and when one becomes a surety such as a guarantor. Parties may agree to all other contracts verbally.
Statute of LimitationsIn Washington, land contracts allow for recovery of the land for ten years in the case of breach. The majority of other written contracts remain enforceable for a period of six years. A party may attempt to remedy any breach for a verbal contract within three years.
Contract TermsAll contracts for sales should include a description of the goods, time of delivery, method of payment, and identification of the parties. Other suggested provisions include tax obligation, inspection, risk of loss, compliance with laws, waiver, warranties, laws governing contract, attorney fee provision, assignment, authority of agents, indemnification, remedies, jurisdiction, validity of provisions, notice, non-exclusive engagement, default, severability, modification, and integration. All real estate contracts should include a description of the property, identification of the parties, total purchase amount, and closing date. Additional suggested provisions include earnest money, items included or excluded, closing costs assignment, prorations, taxes and assessments, insurance, home protection plans, special stipulations, loan and/or appraisal contingencies, inspection contingencies, risk of loss, quality of title, default, real estate commission, addendums, method of execution and delivery, and condition of property.
Excuse for Non-PerformanceA breach of contract means non-performance by one party on the contract. Typical excuses for non-performance on a contract include mistake, misrepresentation, frustration of purpose, impossibility, illegality, unclean hands, unconscionability, and accord and satisfaction. Frustration of purpose means an unforeseen event undermines a party's purpose for entering into a contract. Unclean hands refers to when the other party acted unethically or in bad faith. Unconscionability describes terms extremely unjust or overwhelmingly one-sided. Accord and satisfaction indicates the party already performed.
Remedies for Non-PerformanceThe performing party may seek a remedy for a breach of contact. Typically, a party would sue for the loss due to the breach of contract and seek compensatory damages. Compensatory damages mean damages for loss, injury, or harm suffered as a result of the breach. However, other remedies include specific performance, liquidated damages, and rescission. Specific performance requires the breaching party to complete the task anyway. Liquidated damages refer to damages included in the original contract in case of breach. Rescission creates a legal fiction where the contract never occurred and both parties return to their position prior to the contract.