1. Texas Real Estate Contracts 4 th Edition © 2015 OnCourse Learning

2. Chapter 5: Legality of the Contract © 2015 OnCourse Learning

3. Legality, in general When parties enter into a contract, the contract must be legal. © 2015 OnCourse Learning

4. Contravention of Public Policy A contract that violates public policy is void and unenforceable. A contract that violates public policy is defined as a contract that is contrary to the best interests of the public or the public good. © 2015 OnCourse Learning

5. Contravention of Constitution, Statute, Ordinance If a contract is made in violation of an express constitutional, statutory, or ordinance provision, the contract will be deemed void and unenforceable. © 2015 OnCourse Learning

6. Unlawful Intent of the Parties Contracts may be found void and unenforceable where the subject matter of the contract is intended to be used for an unlawful purpose. However, contracts that are apparently valid on their face will not always be found unenforceable simply because one of the parties to the contract intended to effect an illegal purpose or perform an illegal act. © 2015 OnCourse Learning

7. Contracts Involving Fraud or Deception of Third Parties Contracts that are intended to deceive third parties or even the public are void as against public policy and are unenforceable in a court at law. © 2015 OnCourse Learning

8. Common Law Fraud The elements of a common law fraud claim are that the speaker made – a material representation, – that was false, – that the speaker knew was false at the time it was made, – that was made with the intention of being acted upon, – the party acted in reliance, and – injury was suffered. © 2015 OnCourse Learning

9. Texas Real Estate Fraud Section 27.01 of the Texas Business and Commerce Code deals specifically with fraud in real estate transactions. © 2015 OnCourse Learning

10. Texas Deceptive Trade Practices– Consumer Protection Act Enacted to protect consumers against – false, misleading, and deceptive business practices; – unconscionable actions; and – breaches of warranty © 2015 OnCourse Learning

11. --Waiver The general rule is that a waiver by a consumer of the provisions of the Act is contrary to public policy and is unenforceable and void. However, a waiver is valid and enforceable if certain conditions are met. – the waiver is in writing and is signed by the consumer; – the consumer is not in a significantly disparate bargaining position; and – the consumer is represented by legal counsel in seeking or acquiring the goods or services. © 2015 OnCourse Learning

12. --Defenses and Indemnity Defenses can involve reliance on – official government records – Information from another source – Information concerning a test required or prescribed by a government agency Indemnity refers to a right whereby one party agrees to indemnify, or restore, another upon the occurrence of some anticipated loss. © 2015 OnCourse Learning

13. --Statute of Limitations Within two years after the date on which the false, misleading, or deceptive act or practice occurred or Within two years after the consumer discovered or, in the exercise of reasonable diligence, should have discovered the occurrence of the false, misleading, or deceptive act or practice. © 2015 OnCourse Learning