Real estate contract law forms obligations that the law will enforce. The law provides remedies if there is a breach of real estate contract, methods to cancelling a real estate contract, and recognizes the performance of an obligation noted in a contract as a duty. Contracts arise when a duty does or may come into existence, because of an obligation made by one of the parties. To be legally binding as a contract, an obligation must be exchanged for adequate consideration. Adequate consideration is a benefit or detriment which a party receives which reasonably and fairly induces them to make the obligation/contract. For example, obligations that are purely gifts are not considered enforceable because the personal satisfaction the grantor of the obligation may receive from the act of giving is normally not considered adequate consideration. Certain obligations that are not considered contracts may, in limited circumstances, be enforced if one party has relied to his detriment on the assurances of the other party.
- Contracts are mainly governed by state statutory law.
- Private law principally includes the terms of the agreement between the parties who are exchanging obligations.
- Statutory law may require some contracts be put in writing and executed with particular formalities. Otherwise, the parties may enter into a binding agreement without signing a formal written document.
- Most of the principles of the common law of contracts are outlined in the Restatement Second of The Law of Contracts published by the American Law Institute.
- The Uniform Commercial Code, whose original Articles have been adopted in nearly every state, represents a body of statutory law that governs important categories of contracts.
In 1988, the United States joined the United Nations Convention on Contracts for the International Sale of Goods which now governs contracts within its scope.