Requirements for an Enforceable Contract

8/13/2019 Requirements for an Enforceable Contract

1/7

Requirements for an Enforceable Contract

1. Offer-to loan

2. Acceptance-of offer to loan

3. Mutual Consideration-on offeror...and offeree

4. Mutual Intention-on offeror...and offeree

5. Capacity-over age eighteen...of sound mind

6. Legal Object- free of fraud

7. In Writing if Required

8. Privity- the relation privies...obsolete..privacy

Promissory Note Note Mortgage Maritime Lien

There are two principal qualities essential to the validity of a note;

first, that it be payable at all events, not dependent on any

contingency; nor payable out of any particular fund. And, secondly, it

is required that it be for the payment of money only; and not in bank

notes, though it has been held differently in the state of New York. A

promissory note payable to order or bearer passes by indorsement

PROMISSORY NOTE defined: contracts. A written promise to pay a certainsum of money, at a future time, unconditionally. 7 Watts & S. 264; 2

Humph. R. 143; 10 Wend. 675; Minor, R. 263; 7 Misso. 42; 2 Cowen, 536;

6 N. H. Rep. 364; 7 Vern. 22. A promissory note differs from a mere

acknowledgment of debt, without any promise to pay, as when the debtor

gives his creditor an I 0 U. (q.v.) See 2 Yerg. 50; 15 M. & W. 23. But

see 2 Humph. 143; 6 Alab. R. 373. In its form it usually contains a

promise to pay, at a time therein expressed, a sum of money to a

certain person therein named, or to his order, for value received. It

is dated and signed by the maker. It is never under seal. 2. He who

makes the promise is called the maker, and he to whom it is made is the

payee. Bayley on Bills, 1; 3 Kent, Com, 46. 3. Although a promissory

note, in its original shape, bears no resemblance to a bill of

exchange; yet, when indorsed, it is exactly similar to one; for then it

is an order by the indorser of the note upon the maker to pay to the

indorsee. The indorser is as it were the drawer; the maker, the

acceptor; and the indorsee, the payee. 4 Burr. 669; 4 T. R. 148; Burr.

1224. 4. Most of the rules applicable to bills of exchange, equally

affect promissory notes. No particular form is requisite to these

instruments; a promise to deliver the money, or to be accountable for

it, or that the payee shall have it, is sufficient. Chit. on Bills, 53,

54. 5. There are two principal qualities essential to the validity of a

note; first, that it be payable at all events, not dependent on any

contingency; 20 Pick. 132; 22 Pick. 132 nor payable out of any

particular fund. 3 J. J. Marsh. 542; 5 Pike, R. 441; 2 Blackf. 48; 1

Bibb, 503; 1 S. M. 393; 3 J. J. Marsh. 170; 3 Pick. R. 541; 4 Hawks,

102; 5 How. S. C. R. 382. And, secondly, it is required that it be for

the payment of money only; 10 Serg. & Rawle, 94; 4 Watts, R. 400; 11Verm. R. 268; and not in bank notes, though it has been held

differently in the state of New York. 9 Johns. R. 120; 19 Johns. R.

144. 6. A promissory note payable to order or bearer passes by

indorsement, and although a chose in action, the holder may bring suit

on it in his own name. Although a simple contract, a sufficient

consideration is implied from the nature of the instrument. Vide 5 Com.

Dig. 133, n., 151, 472 Smith on Merc. Law, B. 3, c. 1; 4 B. & Cr. 235 7

D. P. C. 598; 8 D. P. C. 441 1 Car. & Marsh. 16. Vide Bank note; Note;

Reissuable note. A Law Dictionary Adapted To The Constitution And Laws

1


2/7

Of The United States Of America And Of The Several States Of The

American Union by: John Bouvier Revised Sixth Edition, 1856

SEISED defined: or seise: to put in possession of property or vest with

the right of possession or succession seized of land > 2): to take

possession or custody of (property) esp. by lawful authority seize the interest or property subject to

forfeiture Federal Rules of Criminal Procedure Rule 32(b)(2)> seize

the goods subject to his security interest and keep them in

satisfaction of the debt J. J. White and Railroad S. Summers >

compare FORECLOSE, REPOSSESS

CONVEYED defined: - Law: To transfer ownership of or title to. Has the

right to mortgage, grant and convey the Property and that the Property

is unencumbered, except for encumbrances of record unencumbered -

Property that is not subject to any creditor claims or liens. For

example, if a house is owned free and clear (meaning the owner owes

no mortgage to anyone), it is unencumbered. Also, if a person were to

buy stocks with cash rather than on margin, it is unencumbered.

BORROWER warrants and will defend generally the title to the Property

against all claims and demands, subject to any encumbrances of record.

WARRANTS defined: - Law To guarantee clear title to (real property).

Generally - Without reference to particular instances or details; not

specifically: generally speaking.

SECURITY INSTRUMENT defined: In a mortgage, the mortgagor, a person or

entity with ownership rights in real property (usually, but not always

the debtor on the underlying obligation), grants a lien on the real

property to the mortgagee, the person or entity to whom the debt is

owed. Once the debt is paid, the mortgagee records a document (e.g.

certificate of discharge) indicating that the lien is discharged. In a

deed of trust, the trustor is the person or entity with ownership

rights in real property (usually, but not always the debtor on the

underlying obligation). The trustor grants a lien to a trustee (often a

title company). The trustee holds the lien in trust for a beneficiary,

the person or entity to whom the debt is owed. Once the debt is paid,

the trustee reconveys the deed of trust to the trustor.

GRANT defined: Law -a transfer of property by deed.

MORTGAGE defined: mortgage (n.) 1390, from O.Fr. morgage (13c.), mort

gaige, lit. "dead pledge" (replaced in modern Fr. by hypothque),

from mort "dead" + gage "pledge;" so called because the deal dies

either when the debt is paid or when payment fails. O.Fr. mort is from

V.L. *mortus "dead," from L. mortuus, pp. of mori "to die" (see

mortal).= 2 0 The verb is first attested 1467.

TRUSTOR defined: noun Law. a person who creates a trust.

SETTLOR defined: noun Law. a person who makes a settlement of property.

SETTLEMENT defined: Law. a. final disposition of an estate or the like.

b. the settling of property, title, etc., upon a person. c. the

property so settled.

BENEFICIARY defined: One that receives a benefit: I am the beneficiary

2


3/7

of your generosity. The recipient of funds, property, or other

benefits, as from an insurance policy or will. Ecclesiastical the

holder of a benefice. An individual, institution, trustee, or estate,

which receives, or may become eligible to receive, benefits under a

will, insurance policy, retirement plan, annuity, trust, or other

contract.

ESTATE defined: the interest of a particular degree, nature, quality,

or extent that one has in land or other property compare

FEE future interest at INTEREST, REMAINDER, REVERSION, TENANCY.

FEE SIMPLE defined: 1292, from O.Fr. fieu, from M.L. feodum "land or

other property whose use is granted in return for service," probably

from Frank. *fehu-od "payment-estate," in which the first element is

cognate with O.E. feoh "money, property, cattle" (also Ger. Vieh

"cattle," Goth. faihu "money, fortune"), from PIE *peku- "cattle" (cf.

Skt. pasu, Lith. pekus "cattle;" L. pecu "cattle," pecunia "money,

property"); second element similar to O.E. ead "wealth." Sense of

"payment for services" first recorded c.1390. Fee-simple is "absolute

ownership," as opposed to fee-tail "entailed ownership," inheritance

limited to some particular class of heirs (from O.Fr. taillir "to cut,to limit").

PRIVITY defined: privity noun, plural - ties. 1. private or secret

knowledge. 2. participation in the knowledge of something private or

secret, esp. as implying concurrence or consent. 3. Law. the relation

between privies.- Law. a person participating directly in or having a

derivative interest in a legal transaction. 4. Obsolete. privacy.

PRIVY defined: Law One of the parties having an interest in the same

matter.

HYPOTHEQUE defined: French law. Properly, the right acquired by the

creditor over the immovable property which has been assigned to him

by his debtor, as security for his debt, although he be not placed in

possession of it. The hypotheque might arise in two was. 1. By the

express agreement of the debtor, which was the conventional

hypotheque. 2. By disposition of law, which was the implied or legal

hypotheque. This was nothing but a lien or privilege which the

creditor enjoyed of being first paid out of the land subjected to

this incumbrance. For example, the landlord had hypotheque on the

goods of his tenant or others, while on the premises let. A mason had

the same on the house he built. A pupil or a minor on the land of his

tutor or curator, who had received his money. Domat, Loix Civiles, 1.

3, & 1; 2 Bouv. Inst. 1817. A Law Dictionary Adapted To The

Constitution And Laws Of The United States Of America And Of The

Several States Of The American Union by: John Bouvier Revised Sixth

Edition, 1856

VESSEL defined: A ship, brig, sloop, or other craft used, or capable of

being used, in navigation on water. In order to be a "vessel," for

purposes of an action under Jones Act, the structure's purpose must to

some reasonable degree be the transportation of passengers, cargo or

equipment from place to place across navigable waters. Buna v. Pacific

Far East Line, Inc., D.C.Cal., 441 F.Supp. 1360, 1364. Though, the term

"vessel," in admiralty law, is not limited to ships or vessels engaged

in commerce. St. Hilaire Moye v. Henderson, C.A.Ark., 496 F.2d 973,

3


4/7

979. Many special purpose craft, such as dredges, floating derricks and

barges equipped for special purposes or operations are "vessels" within

meaning of Jones Act, and persons regularly employed aboard such a

vessel in aid of its purposes are "seamen." Hill v. Diamond, C.A.Va.,

311 F.2d 789, 791, 792. On the other hand, however, everything that

floats is not necessarily a "vessel," in purview of Jones Act. Bennett

v. Perini Corp., C.A.Mass., 510 F.2d 114, 116. For example, a floating

dry dock which was moored by chains and cables to shipyard dock at time

of injury to shipyard employee and which was in use as a dry dock was

not a "vessel" and therefore no warranty of seaworthiness arose. Keller

v. Dravo Corp., C.A.La., 441 F.2d 1239, 1244. Blacks Law Dictionary

Sixth Edition (page 1562, 1563).

UNCITRAL-United Nations Convention On International Trade Law

International Convention on Maritime Liens and Mortgages

(Geneva, 6 May 1993)

The States Parties To This Convention:

CONSCIOUS of the need to improve conditions for ship financing and the

development of national merchant fleets;

RECOGNIZING the desirability of international uniformity in the field

of maritime liens and mortgages, and therefore;

CONVINCED of the necessity for an international legal instrument

governing maritime liens and mortgages;

HAVE DECIDED to conclude a Convention for this purpose and have

therefore agreed as follows:

Article 1 Recognition and enforcement of mortgages, "hypothques" and

charges Mortgages, "hypothques" and registrable charges of the same

nature, which registrable charges of the same nature will be referred

to hereinafter as "charges", effected on seagoing vessels shall be

recognized and enforceable in States Parties provided that: (a) Such

mortgages, "hypothques" and charges have been effected and registered

in accordance with the law of the State in which the vessel is

registered; (b) The register and any instruments required to be

deposited with the registrar in accordance with the law of the State in

which the vessel is registered are open to public inspection, and that

extracts from the register and copies of such instruments are

obtainable from the registrar; and (c) Either the register or any

instruments referred to in subparagraph (b) specifies at least the name

and address of the person in whose favour the mortgage, "hypothque" or

charge has been effected or that it has been issued to bearer, the

maximum amount secured, if that is a requirement of the law of the

State of registration or if that amount is specified in the instrumentcreating the mortgage, "hypothque" or charge, and the date and other

particulars which, according to the law of the State of registration,

determine the ranking in relation to other registered mortgages,

"hypothques" and charges.

Article 2 Ranking and effects of mortgages, "hypothques" and charges

The ranking of registered mortgages, "hypothques" or charges as

between themselves and, without prejudice to the provisions of this

Convention, their effect in regard to third parties shall be determined

4


5/7

by the law of the State of registration; however, without prejudice to

the provisions of this Convention, all matters relating to the

procedure of enforcement shall be regulated by the law of the State

where enforcement takes place.

Article 3 Change of ownership or registration 1. With the exception of

the cases provided for in articles 11 and 12, in all other cases that

entail the deregistration of the vessel from the register of a State

Party, such State Party shall not permit the owner to deregister the

vessel unless all registered mortgages, "hypothques" or charges are

previously deleted or the written consent of all holders of such

mortgages, "hypothques" or charges is obtained. However, where the

deregistration of the vessel is obligatory in accordance with the law

of a State Party, otherwise than as a result of a voluntary sale, the

holders of registered mortgages, "hypothques" or charges shall be

notified of the pending deregistration in order to enable such holders

to take appropriate action to protect their interests; unless the

holders consent, the deregistration shall not be implemented earlier

than after a lapse of a reasonable period of time which shall be not

less than three months after the relevant notification to such holders.

2. Without prejudice to article 12, paragraph 5, a vessel which is orhas been registered in a State Party shall not be eligible for

registration in another State Party unless either: (a) A certificate

has been issued by the former State to the effect that the vessel has

been deregistered; or (b) A certificate has been issued by the former

State to the effect that the vessel will be deregistered with immediate

effect, at such time as the new registration is effected. The date of

deregistration shall be the date of the new registration of the vessel.

Article 4

Maritime liens 1. Each of the following claims against the owner,

demise charterer, manager or operator of the vessel shall be secured by

a maritime lien on the vessel: (a) Claims for wages and other sums due

to the master, officers and other members of the vessel's complement in

respect of their employment on the vessel, including costs of

repatriation and social insurance contributions payable on their

behalf; (b) Claims in respect of loss of life or personal injury

occurring, whether on land or on water, in direct connection with the

operation of the vessel; (c) Claims for reward for the salvage of the

vessel; (d) Claims for port, canal, and other waterway dues and

pilotage dues; (e) Claims based on tort arising out of physical loss or

damage caused by the operation of the vessel other than loss of or

damage to cargo, containers and passengers' effects carried on the

vessel. 2. No maritime lien shall attach to a vessel to secure claims

as set out in subparagraphs (b) and (e) of paragraph 1 which arise out

of or result from: (a) Damage in connection with the carriage of oil or

other hazardous or noxious substances by sea for which compensation is

payable to the claimants pursuant to international conventions ornational law providing for strict liability and compulsory insurance or

other means of securing the claims; or (b) The radioactive properties

or a combination of radioactive properties with toxic, explosive or

other hazardous properties of nuclear fuel or of radioactive products

or waste.

Article 5

Priority of maritime liens 1. The maritime liens set out in article 4

5


6/7

shall take priority over registered mortgages, "hypothques" and

charges, and no other claim shall take priority over such maritime

liens or over such mortgages, "hypothques" or charges which comply

with the requirements of article 1, except as provided in paragraphs 3

and 4 of article 12. 2. The maritime liens set out in article 4 shall

rank in the order listed, provided however that maritime liens securing

claims for reward for the salvage of the vessel shall take priority

over all other maritime liens which have attached to the vessel prior

to the time when the operations giving rise to the said liens were

performed. 3. The maritime liens set out in each of subparagraphs (a),

(b), (d) and (e) of paragraph 1 of article 4 shall rankpari passuas

between themselves. 4. The maritime liens securing claims for reward

for the salvage of the vessel shall rank in the inverse order of the

time when the claims secured thereby accrued. Such claims shall be

deemed to have accrued on the date on which each salvage operation was

terminated.

Article 6

Other maritime liens Each State Party may, under its law, grant other

maritime liens on a vessel to secure claims, other than those referred

to in article 4, against the owner, demise charterer, manager oroperator of the vessel, provided that such liens: (a) Shall be subject

to the provisions of articles 8, 10 and 12; (b) Shall be extinguished

(i) after a period of 6 months, from the time when the claims secured

thereby arose unless, prior to the expiry of such period, the vessel

has been arrested or seized, such arrest or seizure leading to a forced

sale; or (ii) at the end of a period of 60 days following a sale to

a bona fide purchaser of the vessel, such period to commence on the

date on which the sale is registered in accordance with the law of the

State in which the vessel is registered following the sale; whichever

period expires first; and (c) Shall rank after the maritime liens set

out in article 4 and also after registered mortgages, "hypothques" or

charges which comply with the provisions of article 1.

Article 7

Rights of retention 1. Each State Party may grant under its law a right

of retention in respect of a vessel in the possession of either:

(a) A shipbuilder, to secure claims for the building of the vessel; or

(b) A ship-repairer, to secure claims for repair, including

reconstruction of the vessel, effected during such possession.

2. Such right of retention shall be extinguished when the vessel ceases

to be in the possession of the shipbuilder or ship-repairer, otherwise

than in consequence of an arrest or seizure.

BONA FIDE PURCHASER defined: One who has purchased property for value

without any notice of any defects in the title of the seller. Walters

v. Calderon, 25 Cal.App.3d 863, 102 Cal.Rptr. 89, 97. One who pays

valuable consideration, has no notice of outstanding rights of others,and acts in good faith. J. C. Equipment, Inc. v. Sky Aviation, Inc.,

Mo. App., 498 S.W.2d 73, 75. Bona fide purchaser for value is one who,

without notice of another's claim of right to, or equity in, property

prior to his acquisition of title, has paid vendor a valuable

consideration. Snuffin v. Mayo, 6 Wash.App. 525, 494 P.2d 497.

One who buys property or to whom a negotiable document of title is

transferred in good faith and without notice of any defense or claim to

the property or document. U.C.C. 7-501. One who takes trust property

for value and without notice of breach of trust and who is not

6


7/7

knowingly part of an illegal transaction. Restatement, Second, Trusts

284; Vniform Probate Code 2-202(3).

7

Documents

Requirements for an Enforceable Contract