Enforcing Oral Contracts In Texas

While this may come as a surprise to many, in Texas, most oral agreements are legal and enforceable. Unfortunately, problems arise when an oral contract dispute comes to court. Without a written agreement, the contract can become a case of “he said/she said.” To avoid such disputes, let’s briefly review the requirements for an oral agreement.

What is a Contract?

A contract is a binding set of promises between competent parties. Whether written or oral, in order to be valid, a contract must have four elements. There must be both an offer and an acceptance of this offer. Then there must be a mutual understanding of the parties’ specific benefits and obligations—what in legal circles is referred to as “a meeting of the minds.” And, finally, there must be “consideration,” meaning that each party receives some benefit from performing the contract (e.g., payment will be rendered in exchange for goods or services).

For oral agreements, the difficulty is in proving that each of those elements existed at the time of the agreement.

Typically, a litigating party will offer evidence proving the existence of the agreement, by showing that a party did perform at least some of the duties required by the verbal agreement. But a court is basically looking to see if there’s any other possible explanation for the parties’ actions. To answer that, parties will bring in correspondence, witness statements, invoices, and more supporting documentation and evidence to support their claims.

Some Contracts Must Be in Writing:

Despite oral contracts’ general enforceability, Texas law—including the Texas Statute of Frauds—requires certain dealings to be in writing. With few exceptions, the following agreements must have a written contract to be enforceable:

  • Agreements between attorneys or parties regarding pending lawsuits;
  • Agreements with a duration of more than one year;
  • Commission agreements related to certain oil, gas or mineral agreements;
  • Contracts for the sale of goods for $500 or more;
  • Contracts for sale of real estate or commissions from a real estate sale;
  • Guaranty agreements;
  • Loans from financial institutions;
  • Marriage agreements;
  • Medical/healthcare agreements; and
  • Promises to pay debts or damages of a decedent.

What Can You Do?

 Ideally, business agreements should be in writing. Written contracts are the legal ounce of prevention that yields much more than a pound of cure.

But in practice, the law recognizes that many industries rely on oral contracts and a proverbial handshake. If you are in a situation where you are concerned about the enforceability of a contract, contact us today to discuss your options and strategies for going forward.

 

 

 

 

 

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