Contracts
What happens if a Delaware real estate contract contains an illegal provision?
AThe entire contract is automatically void
BCourts may sever the illegal provision and enforce the remaining valid terms, or void the contract depending on whether the illegal term was central to the agreement✓ Correct
CThe contract remains fully enforceable — courts ignore illegal provisions
DOnly the party who inserted the illegal provision is penalized
Explanation
When a contract contains an illegal provision, courts use two approaches: severability (removing the illegal clause and enforcing the rest, if the legal portions can stand alone) or voiding the entire contract if the illegal provision was central to the agreement. Real estate contracts should be carefully drafted to avoid illegal terms.
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