Can contract be enforced if it contains an illegal provision?

   
SEVERABILITY OF ILLEGAL CONTRACT PROVISION

Dallas Court of Appeals has this to say in case involving attorney fee contract:  

  

We have held “that where an otherwise legal contract contains an illegal provision that is not an essential feature of the agreement, thus being clearly severable from other valid provisions, the other provisions of the agreement will not be deemed to be invalid simply because of the presence of the illegal provision.” Rogers v. Wolfson, 763 S.W.2d 922, 925 (Tex. App.-Dallas 1989, writ denied); see also Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 662 (Tex. App.-Dallas 1992, no writ) (“Where a contracting party agrees to perform separable acts, and one is void, the invalid provision may be severed from the valid provision and the valid provision enforced if the intent of the parties is not thereby frustrated.”); Mandril v. Kasishke, 620 S.W.2d 238, 247 (Tex. Civ. App.-Amarillo 1981, writ ref'd n.r.e.). 

SOURCE:  DALLAS COURT OF APPEALS - 05-10-00725-CV – 4/27/12
 

[Father of client in criminal case] does not challenge the trial court's finding of fact that he signed the fee agreement. In another unchallenged finding, the trial court found that the fee agreement is “a valid contract and enforceable.” We conclude that the fee agreement is clearly severable from the irrevocable assignment and is valid regardless of the validity of the irrevocable assignment.

[Parent of client in criminal case]  agreed “to be responsible for my sons Atty Fees as set out in this Contract and Irrevocable Assignment” signed the same date. The fee is set out in both the fee agreement and the irrevocable assignment. But [Parent's] agreement to be responsible for those fees is not contingent of the validity of the irrevocable assignment. The irrevocable assignment was merely a means of payment of or security for the attorney's fees under the fee agreement. It was not an essential feature of the agreement to pay TWLF for its services in representing [son] in the federal criminal prosecution. The fee agreement is clearly enforceable without the irrevocable assignment. Nothing is illegal about a contract to pay an attorney for his services or an agreement by a parent to be responsible for the fees for representing his child in a criminal proceeding. 

Public policy defense to contract enforcement in Texas

State's public policy may provide grounds for avoidance of contract

ILLEGAL CONTRACT – PUBLIC POLICY AS BAR TO JUDICIAL ENFORCEMENT OF A CONTRACT - CONTRACT MAY NOT BE IN VIOLATION OF PUBLIC POLICY

  

The Legislature determines public policy through statutes. Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 665 (Tex. 2008). In addition, the Texas Supreme Court has determined that certain agreements violate public policy. Id. “[T]o determine whether a contract violates public policy, we consider the policies underlying any applicable statutes.” Lawrence v. CDB Servs., Inc., 44 S.W.3d 544, 555 (Tex. 2001) (superseded by statute on other grounds).

In examining an agreement to determine if it is against public policy, we look to see whether the agreement has a tendency to injure the public good. Sacks v. Dallas Gold & Silver Exch., Inc., 720 S.W.2d 177, 180 (Tex. App.—Dallas 1986, no writ).

Whether a contract is contrary to public policy is a question of law. Hoover Slovacek LLP v. Walton, 206 S.W.3d 557, 562 (Tex. 2006).

A RELEASE IS A CONTRACT AND THUS SUBJECT TO STATE'S PUBLIC POLICY

In general, Texas law favors voluntary settlement of disputes and, thus, will give a properly executed release legal force. See Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 178 (Tex. 1997); see also In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 129 & n.11 (Tex. 2004) (orig. proceeding) (“As a rule, parties have the right to contract as they see fit as long as their agreement does not violate the law or public policy.”).

A release, just as any other contract, however, is subject to the public policy of the State. Ranger Ins. Co. v. Ward, 107 S.W.3d 820, 827 (Tex. App.—Texarkana 2003, pet. denied).

SOURCE: Houston Court of Appeals 14-09-00641-CV 5/3/11

LEGAL TERMS: Illegal contract defense | public policy | illegal contract | enforceability avoidance of contracts

Illegal Contract Defense

ILLEGALITY AS AFFIRMATIVE DEFENSE TO BREACH-OF-CONTRACT CLAIM The validity of a contract is generally a question of law. Farah v. Mafrige & Kormanik, P.C., 927 S.W.2d 663, 678 (Tex. App.--Houston [1st Dist.] 1996, no writ). ILLEGAL CONTRACT DEFINED - VOID CONTRACTS An illegal contract is one in which the parties undertake what the law forbids. Franklin v. Jackson, 847 S.W.2d 306, 309 (Tex.App.--El Paso 1992, writ denied). A contract to do a thing which cannot be performed without a violation of the law is void. Id. Because the contract violates the law, it imposes no legal obligation on the parties. Miller v. Long-Bell Lumber Co., 148 Tex. 160, 222 S.W.2d 244, 246 (Tex. 1949); Franklin, 847 S.W.2d at 309. However, a contract which could have been performed in a legal manner will not be declared void simply because it may have been performed in an illegal manner. Franklin, 847 S.W.2d at 309, citing Lewis v. Davis, 145 Tex. 468, 199 S.W.2d 146, 148-49 (1947); Wade v. Jones, 526 S.W.2d 160, 162-63 (Tex.Civ.App.--Dallas 1975, no writ). PRESUMPTION OF LEGALITY - BURDEN OF PROOF TO SHOW ILLEGALITY The law presumes that contracts are legal, and the burden to prove illegality is on the party asserting it, in this case, Appellants. See Franklin, 847 S.W.2d at 310. Unless the face of the contract shows it is illegal, the party asserting illegality must present evidence demonstrating the illegality before a court may declare the contract void. See Lewis, 199 S.W.2d at 149; Franklin, 847 S.W.2d at 310. SOURCE: 08-07-00071-CV (7/29/09)