Texas Real Estate Contracts
4th Edition
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Chapter 1: Introduction to Contracts
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What is a Contract: An Overview
A contract is
a promise or a set of promises for the
breach of which the law gives a remedy,
or the performance of which the law in
some way recognizes as a duty.
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Elements of a Contract
• the mutual assent of the parties shown by
offer and acceptance
• consideration
• capacity of the parties
• legality and
• sometimes a writing
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Purpose of a Contract
The purpose of any contract is to set out the
terms and conditions of the agreement
between the parties.
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Classification of Contracts
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Express vs. Implied
Unilateral vs. Bilateral
Valid vs. Unenforceable
Void vs. Voidable
Executed vs. Executory
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Express vs. Implied
• An express contract is a contract created by
an expression of the parties. This expression
may be either verbal or written.
• An implied contract is a contract that is not
created by any expression of the parties, but
is inferred from the circumstances of the
transaction.
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Unilateral vs. Bilateral
• A unilateral contract is a contract where one
party to the contract makes a promise and
the other party accepts by performance.
• A bilateral contract is a contract where one
party to the contract makes a promise in
exchange for a promise by the second
contracting party.
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Valid vs. Unenforceable
• A valid contract is a contract which has all of
the essential elements of a contract and is,
therefore, enforceable in a court of law.
• An unenforceable contract is a contract
which for some reason can not be enforced.
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Void vs. Voidable
• A void contract is a contract that does not
exist under the law, that is, the contract has
failed to include all of the essential elements
necessary to the creation of a valid contract.
• A voidable contract is a valid contract, but
which may be legally avoided at the option of
one of the parties.
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Executed vs. Executory
• An executed contract is a contract which has
been completely performed by the parties.
• An executory contract is a contract that has
not been completed.
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--Death of a party during the executory
period
• When a party dies, the real estate
transaction grinds to a halt until the rights
and/or title of the parties are resolved in a
probate court.
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--Loss of the property during the
executory period
• The Uniform Vendor and Purchaser Risk Act
states that the risk of the loss is on the seller
unless the buyer is in possession.
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--Divorce of the sellers during the
executory period
• Where a lawsuit involves the seller's real
estate, a lis pendens is typically seen in the
county deed records to put third parties on
notice.
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--Bankruptcy of the seller during the
executory period
• Where a voluntary or involuntary bankruptcy
occurs during the pendency of a real estate
sales contract, federal law provides that the
trustee in bankruptcy may assume or reject
any executory contract or unexpired lease of
the debtor.
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Sources of Contract and Real Estate
Law
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Constitutional law
Statutory law
Regulatory law
Case law
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Federal Law
• United States Constitution
– United States Code
• Federal Statutes
– United States Code
• Federal Regulations
– Code of Federal Regulations
– Federal Register
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Federal Law cont.
• Federal Case Law
– United States Supreme Court
• United States Reports
– Federal Appellate Courts
• Federal Reporter
– Federal District Courts
• Federal Supplement
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State Law
• Texas Constitution
– Vernon’s Texas Constitution
• Texas Statutes
– Vernon’s Texas Civil Statutes
– Vernon’s Texas Codes
• Texas Regulations
– Texas Administrative Code
– Texas Register
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State Law cont.
• Texas Case Law
– Texas Supreme Court
• South Western Reporter
– Texas Appellate Courts
• South Western Reporter
– Texas Lower Courts
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