A contract is defined as a bargained for exchange and


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Unformatted text preview: for business persons. A contract is made up of specific component parts: the offer, the acceptance, and the consideration. Each one has particular requirements and issues. In analyzing a situation, it’s always wise to take it from the top, and begin with identifying an offer. If one can be found, proceed to the next step: was that offer accepted by the offeree? Remember, sometimes the original offeror and offeree can change places, such as when a counteroffer is made. If an acceptance is present, be sure that both parties are giving consideration, or that an exception to the consideration requirement is present. A contract is defined as a bargained-for exchange, and by breaking down an agreement into its component parts, it should become more apparent whether or not there is a contract. Focus on Ethics In the first part of the 21st century, a real estate “bubble” formed in the U.S. economy. In other words, prices rose and rose to unrealistic levels. Many people took out mortgages that in all likelihood they were not going to be able to pay off by retirement age, if ever. In some cases the mortgage terms were difficult to understand and buyers may not have realized what they were getting into. In others they were just overpaying in relation to their income. A mortgage is basically a loan contract, which is secured by the lending institution. The bank retains title to the real estate until the loan is paid in full, and if payments are delinquent, the property can be repossessed by the bank in a foreclosure proceeding. Furthermore, the owner would forfeit all payments previously made. When the recession of 2008 hit, many home buyers discovered they could not afford their homes. Many had what is termed negative equity, meaning that they owed more on their mortgages than their homes were worth. In some cases banks foreclosed on them; in others the buyers simply walked away, breaching their contracts. Whole neighborhoods were negatively impacted as empty properties grew derelict,...
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