Texas Real Estate Sales Agent ExamContractsMedium
A buyer and seller have signed a TREC-promulgated One to Four Family Residential Contract (Resale). Before closing, the buyer discovers that the seller intentionally misrepresented the property's square footage. Which of the following statements is true regarding this contract?
- AThe contract remains valid and enforceable, but the buyer can sue for damages after closing.
- BThe contract is voidable by the buyer due to the seller's misrepresentation.
- CThe contract is void from its inception due to fraud.
- DThe contract is voidable by the seller due to the buyer's discovery.
Show answer & explanationAnswer & explanation
Correct answer: B. The contract is voidable by the buyer due to the seller's misrepresentation.
If one party to a contract engages in fraud or misrepresentation, the contract becomes voidable by the innocent party. The innocent party can choose to either affirm the contract and sue for damages or rescind the contract.
Why the other options are wrong
- A. While the buyer could sue for damages, the option to void the contract is also available due to the misrepresentation.
- C. Fraud typically makes a contract voidable, not void from inception, allowing the innocent party to choose their remedy.
- D. Misrepresentation by the seller makes the contract voidable by the buyer, not the seller.
Voidable Contract
A contract that can be legally cancelled or annulled by one or more parties to it without breaching the contract, often due to a defect like fraud, misrepresentation, or duress.
- Valid until rescinded by the injured party.
- Injured party has the option to affirm or rescind.
- Common causes include fraud, duress, undue influence, or minority.
Memory trick: Valid contracts are V.O.I.D. - Void, Voidable, Invalid, or Defective.