12.2 ENFORCEABLE CONTRACTS

A contract may be enforceable in two ways:

Enforceable between the parties – This is our everyday contract which we make with family, friends, co-workers. It depends on the good will of the parties for the contract to be carried out. If one party does not abide by the contract, the injured party cannot enforce the contract in court if the agreement was an oral contract.

Enforceable in Court – only written contracts can be enforceable in court, with very few ex­ceptions. In Illinois, most of our real estate contracts/agreements have to be in writing.

The Illinois Statute of Frauds requires that any contracts for the sale of land, or for leases that for more than one year from the date they are entered into, must be in writing to be enforceable in court.

The Illinois Real Estate License Act of 2000 also indicates that certain other contracts must be in writing, such as employment agreements between sponsoring brokers and their sponsored licensees.

Bilateral and Unilateral Contracts
Contracts may be classified as either bilateral or unilateral.

• In a bilateral contract, both parties promise to do something; one promise is given in exchange for another. A real estate sales contract is a bilateral contract because the seller promises to sell a parcel of real estate and convey property title to the buyer, who in turn promises to pay a certain sum of money for the property.
• A unilateral contract, on the other hand, is a one-sided agreement. One party makes a promise to induce a second party to do something. The second party is not legally obligated to act. However, if the second party does comply, the first party is then obligated to keep the promise. An option contract to retain one’s option to possibly make a purchase later is an example of a unilateral contract.

Illinois case law supports the proposition that exclusive brokerage contracts are unilateral, not bilateral, contracts. If exclusive brokerage contracts were bilateral contracts, then the listing broker would be in breach of contract if he failed to produce a buyer.

Executed and Executory Contracts
A contract may be classified as either executed or executory, depending on whether the agreement is performed.

• An executed contract is one in which all parties have fulfilled their promises: the contract has been performed. This sometimes can be confused with the word execute, which refers to the act of signing a contract.

An executory contract exists when one or both parties still have an act to perform. A sales contract is an executory contract from the time it is signed until closing: ownership has not yet changed hands, and the seller has not received the sales price. At closing, the sales contract is executed.