Texas Real Estate Contracts
4 th Edition
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Chapter 7: Amendment or Termination
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Amendment, in general
• Amendment is a fair way to correct a written contract to accurately reflect the terms of the intended agreement.
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Construction of Contracts
• The parol evidence rule states that terms set forth in a writing intended by the parties to be a final expression of their agreement may not be contradicted or modified by evidence of a prior agreement or a contemporaneous oral agreement.
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Termination, in general
• Termination of the contract can be either mutual or one sided.
• Mutual termination of the contract is often referred to as mutual rescission.
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Discharge of Contract, in general
• Discharge of the contract is simply where one party to the contract terminates the contract with some valid legal excuse.
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Discharge by Performance
• A contract will be discharged when all parties to the contract have performed their obligations.
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Discharge by Lapse of Time
• A contract may also be discharged where there has been a lapse of time.
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Discharge by Modification
• When the original contract is modified by agreement of the parties, the terms of the original contract that were modified are discharged.
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Discharge by Breach
• Where one party to a contract has breached the contract, the remaining parties to the contract are discharged from performance under the contract.
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Discharge by Condition
• There may be instances where a party to the contract is discharged from performing under the contract due to a contingency or condition in the contract.
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Condition Precedent
• A condition precedent is a condition that must occur before a party to a contract is obligated to perform under the contract.
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Condition Subsequent
• A condition subsequent is a condition that exists after the parties enter into a contract that will terminate one of the parties’ obligations to perform under the contract.
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Impossibility of Performance
• Under the doctrine of impossibility of performance, one party's duty to perform under the contract is discharged when, without any fault of that party, it becomes impossible to perform.
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Death or Insanity of a Party to the
Contract
• Death or insanity of a party to a contract does not normally discharge the contract unless the contract is for personal services.
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Frustration of Purpose
• With frustration of purpose, nothing has happened to impede performance, but the purpose has been frustrated in some way by the happening of an event.
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Discharge by Agreement of the Parties
• A contract can be discharged by the mutual agreement of the parties to that contract.
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Substitution
• A substitution changes one party for another under the contract, but the party who is substituted is still liable under the contract.
• If the new party fails to perform as promised, both the new party and the original party will be responsible for the damages.
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Novation
• A novation substitutes a new party for an original party to the contract and completely releases the original party to the contract from all liability under that contract.
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Accord and Satisfaction
• An accord is an executory agreement to accept performance in future satisfaction of a contractual duty.
• Satisfaction is the time when the accord is fully performed.
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Breach of Contract, in general
• Breach of contract will occur anytime a party to the contract fails to perform without a legal excuse.
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Federal Jurisdiction
• federal question jurisdiction
• diversity of citizenship jurisdiction
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Texas Jurisdiction
• Justice court has a jurisdictional amount of between $0.01 and $10,000; however, it has exclusive jurisdiction over those cases from $0.01 to $500.
• The justice court has exclusive subject matter jurisdiction over forcible entry and detainer actions, more commonly referred to as eviction proceedings.
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Texas Jurisdiction cont.
• The constitutional county court has a jurisdictional amount of between $200.01 and $10,000 and therefore overlaps the jurisdiction of the justice court.
• The county court at law has a jurisdictional amount of between $500.01 and $200,000.
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Texas Jurisdiction Cont.
• The district court has a jurisdictional amount in excess of $500.
• This court has subject matter jurisdiction over suits
– for enforcement of a lien on land,
– on behalf of the State for escheat,
– for divorce,
– for eminent domain,
– for recovery of land (trespass to try title), and
– for trial of the right to property valued at $500 or more and levied on under a writ of execution, sequestration, or attachment.
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General Breach
• A general breach of contract arises where a party to the contract fails to perform on the date and time indicated for performance.
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Anticipatory Repudiation
• Anticipatory repudiation, or anticipatory breach, is a breach of contract that occurs before the time for performance is due under the contract.
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Remedies for Breach of Contract
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Damages
• Damages are pecuniary compensation that can be recovered in a court of law by a person who has suffered a loss as a result of a breach of contract.
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Benefit of the Bargain Damages
• The most common way in which damages are calculated in breach of contract actions is by measuring the benefit that the nondefaulting party would have received from the contract.
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Restitution Damages
• Under the theory of restitution, the nondefaulting party to a contract can recover for the value of services he or she gave to the non-defaulting party irrespective of whether the non-defaulting party would have lost money on the contract and would have been unable to recover in a suit on the contract.
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Mitigation of Damages
• Mitigation of damages refers to the principle that an injured party cannot recover damages that could reasonably have been avoided.
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Substantial Performance
• Substantial performance is the doctrine that recognizes that performance under a contract that deviates slightly from the terms of the contract will be considered complete performance under the contract less the damages that result from deviation from the contract.
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Specific Performance
• Specific performance is a remedy that requires exact performance by the defaulting party under the contract.
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Rescission
• Rescission is cancellation of the contract.
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Liquidated Damages
• Liquidated damages is the sum that a party to a contract agrees to pay if he or she breaches the contract and is used to predict damages if the contract is breached.
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