What is the legal effect of a provision voiding a contract?  This was the issue in the Fourth Court of Appeals case Mr. W. Fireworks Inc. v. Ozuna.

In the case, Mr. W, between September of 2002 and February of 2003, contracted for the exclusive right to sell firework on the land of three different property owners.  Each contract provided two key provisions: (1) the contract was voidable if fireworks became unlawful during the term of the contract; and (2) the lessors agreed not to sell or lease a part of their property to any of Mr. W’s competitors for ten years after the lease was terminated. 

Although Mr. W originally was able to sell fireworks at all three locations, by January of 2006, it was no longer legal to sell fireworks on any of them, and thus the contract was void.  In March of 2008, however, the city of San Antonio disannexed the lessors’ properties allowing them to sell fireworks on their property again.  The three lessors then contracted with Alamo Fireworks, Inc., one of Mr. W’s competitors, to sell fireworks on their property.

When Mr. W learned of the new contracts it sued the three lessors for breach of contract.  Mr. W argued that "[t]he phrase ‘shall become void’ was a ‘contingent limitation’ that created ‘a voidable agreement, which the restrictive covenant [ten-year restriction] survive[d]."  In other words, the contracts terminated as to the lease, but not as to the ten-year restriction.  The lessors successfully moved for summary judgment arguing the entire contract was void, including the ten-year restriction.  Mr. W appealed.

Was the ten-year restriction enforceable in light of the "void" language?

No, according to the San Antonio Court of Appeals.  As the court explained, when a contract is voidable, it means that the contract may either be set aside or enforced in its entirety.  In other words, Mr. W cannot argue that the illegalization of fireworks made the contract voidable as to its lease obligation, but not to the ten-year restriction.  Thus, the San Antonio Court of Appeals affirmed the trial court’s judgment that the entire agreement was void.

Here is the opinion.